For every $10 spent on goods and services in the American economy, at least a dollar is spent in the “underground economy.” That share has trended up over the last 15 years and two recessions.
That $2.5 trillion in economic activity includes both licit and illicit activities — yes, paying the babysitter cash and buying an illegal gun are both in the underground economy. Poorer nations have higher rates, and likewise, poorer communities in the United States rely more heavily on the informal economy.
Contributing to the academic analysis, American sociologist and ethnographer Sudhir Venkatesh published in 2006 a book called Off the Books: The Underground Economy of the Urban Poor. Backed by years he spent visiting a particular poor neighborhood in Chicago, he chronicled the interpersonal and community dynamics that related to and developed its underground economy. In some ways the book shows its age (as a trivial example, his use of the word “ghetto” feels dated), but in other ways it remains a small, specific window into one community’s underground economy.
“The underground enables poor communities to survive but can lead to their alienation from the wider world,” as the author wrote.
Another of his points I especially liked: “What some might see as a mass of Americans lying about, and out of work, is in many cases an ensemble of persons who lack of private places where they can rest.”
The author renamed his characters and locations for anonymity, but generally follows a neighborhood he calls Maquis Park, including characters like a particular gang leader and an active block leader named Eunice. Below find my notes from the book for future reference.
- Licit and illicit activities both part of disputed numbers for the underground economy
- Author cites a range of studies of different sizes of underground economy but it is dated and varied by what you include and how. More recent measures estimate the American underground economy at 11-12% of GDP or $2.5 trillion. Other countries have far larger off the books economies.
- As segregation eased in late 20th century, white flight was joined by wealthier blacks moving elsewhere, contributing to concentrated poverty;
- An influential ethnography look at the urban poor, William Julius Wilson wrote influential The Truly Disadvantaged in 1987;
- Many sex workers do that work sporadically; their safety ranged: 40% of the 150 prostitutes the author knew in Maquais Park had a pimp; in five years just 1 sex workers died who had a pimp; 13 without pimps died, most from an abusive John or partners, three were drug overdoses (31)
- In 2006, common prices charged by sex workers in this neighborhood: $10 per trick; $25 for hours-long nights out; even sex workers with pimp, who command higher wages, are only at $50 an evening;
- Carol Stack: “domestic kin networks”
- Of 21 households on Eunice’s block, two are nuclear families (both professionals who moved back to their childhood neighborhoods);
- Frequent changes in household composition: permanent, part time and temporary
- “Decent” and “street” are terms used in a bi-polar way to describe urban neighborhoods are in previous literature that this author described as “inadequate” given the overlapping households;
- Author and activist bell hooks (1952-2021) defined “homeplace” as somewhere we can offer “resistance”
- Timothy Bates: black entrepreneurs moved to more lucrative self employment over inner city retail, which was then taken over by foreign born especially Asian small business owners because “running a retail store in the ghetto, bluntly, is a waste of time” (98)
- Tally’s Corner depicted street corner men who always saw themselves by what they’d be in the future, traditional work options were dead ends
- Fish tank metaphor from Josiah: business in the ghetto is just eating crumbs tossed in from the outside (108)
- 115 of 157 small business in Maquais Park are Black owned, another bunch are immigrants especially Asian;
- “Impermanence is opportunity” for the black businesses that flow between barbershop and night club; also notes that contracts and nonprofits are seen as entrepreneurship and revenue drivers when compared against low margin businesses;
- Ethnic and black business divide;
- On commercial corridor West Street, a single individual owns 75% of the stores on West Street; 10% are owned by a married couple in the restaurant by three or more people; they are all over the age of 35 (120)
- Roughly 60% of the proprietors pooled resources from friends and relatives not from banks, 42% have received a bank loan and only 6% have ever benefited from a government program intended to aid minority or small business owners, 10% I have a secure line of credit from the financial institution;
- 9% of the businesses on the street are at least 10 years old, the average lifespan is more like 3 to 4 years before a common declaration of bankruptcy;
- Subleasing property to others (lunches sold in hair salon; prostitutes using the dollar store in off-hours; mechanics in alley) are like credit, all a web that everyone stays stuck too. Nervousness about leaving the comfort of that web;
- Street loans of 20-30% between full time and part time lenders;
- Also many elites give small cash handouts: over three month period, three neighborhood guys kept track for the author, they gave out between $2k-$2,500, almost all for $25-$250 increments, half was essentially free grants for goodwill, the rest were no interest loans expected to be repaid within six months, though between 5-25% was actually paid back in that time (143);
- Residents the author speaks to feel banks “redline” them, so these informal systems exist because they can’t get other funding;
- Manning Marable (1950-2011): the capitalist state is a racist state
- The fable of neighborhood restaurant Marlon’s Kitchen: his father and grandfather had Southside restaurants. Marlon begins to pursue more informal partial sublease businesses to repay loans he has taken out, but that pisses off his peer shop owners (because he is now competing with them). The gang extorts him, he gets beaten up, the local alderman demands campaign contributions for support and tells him to stop competing anyway, everyone leaves him on his own. He gets a loan shark loan but eventually loses his business and leaves Marquis Park altogether. The lesson? There is a delicate balance and set of unspoken rules.
- James Arleander a street hustler in the old sense: essentially homeless who is a nomadic entrepreneur, fixing cars in different alleys with he help of neighbors for six months most. To be in the underground, either you “hide or you pay,” police and neighbors alike;
- “What some might see as a mass of Americans lying about, and out of work, is in many cases an ensemble of persons who lack of private places where they can rest.” (172)
- Three types of users of poor urban space: traders, regulators (of space), and predators (robbers);
- “Trust and cooperation generally trump strife” Community of hustlers , of “social vulnerables” as one puts it (188)
- Disappear into jail , cops “are like our landlords”(196)
- Cop explains the dynamics of the neighborhood park: tolerant of the hustler to avoid the gangbanger 203
- Jane Jacobs’s iconic “eyes on the street” concept of private citizens is naturally understood in poor urban neighborhoods
- “The church is also arguably the oldest institution in the lives of African-Americans; during the American period of slavery, churches worked for social change and played a strong part of the underground railroad were slaves found passage north with a city in freedom.” (219)
- In 1960s, urban crowding and middle income blacks leaving changed black urban churches; they became an intermediary between blacks and white political machine (the Milky Way period”)
- “Religious bosses” rather than political (239)
- In the late 20th century, racial segregation was further developed into racial and socioeconomic segregation;
- One minister estimates that between 1989 and 1995 he earned approximately $10,000 a year for various mediation and de-escalation services within his community (259)
- CCI movements
- “Literature for Black Kings,” a book that gang leader Big Cat uses as his gang manifesto;
- By the late 1970s, urban gangs began becoming more “corporate” and later violent. This is attributed to the departure of the Italian mafia, lack of economic opportunity in black neighborhoods and disinvestment in cities generally (284);
- In 1978, Chicago police merged street gang and narcotics division, reflecting their close link;
- :The gang cannot be adequately understood outside the context of his relationship with everyone around it” neighbors and clergy;
- With declining crack sales, gang leader Big Cat had a member retention problem, as he had to show the 150-200 gang members steady income and growth opportunity;
- In spring 2000, clergy brokered a meeting between gang leader Big Cat and neighborhood leader Marlene to negotiate a daytime summertime lack of activity in the park so kids could play;
- A weekly meeting became a community court
- “The underground enables poor communities to survive but can lead to their alienation from the wider world.”