The Underground Economy

The underground economy, which is also called the shadow system is, "a systen composed of those who can't find a full-time or regular job. Workers turn to anything that pays them under the table, with no income reported and no taxes paid"(Koba 1). The underground economy is both beneficial and detrimental to the economy.
The shadow economy benefits the economy as a whole because it is apart of consumer spending. Whether the money was recieved under the table, or through corporations, consumers are still using that money to buy goods, which overall helps and boost the economy(Koba 1). The underground economy is also beneficial because it helps citizens who might not have other wise gotten a job to receive employment under the table.
The underground economy is also detrimental to the economy. According to Marc Koba, "shadow economies are usually associated with illegal activities, such a drug dealing". The shadow economy, although it is not it's purpose, can be used as a segway to unlawful activities. Also, the underground economy hurts the economy by not providing sufficient taxes, "about $500 billion in taxes were lost last year because of unreported wages"(Koba 2). The shadow economy is also harmful because tax dollars would be lowered if there was no underground economy and shadow economy workers are at a higher risk for low salaries: "Taxes could be lower if the government where able to capture the underground economy instead of raising taxes on those currently paying the various income and payroll taxes...People who do these types of jobs run the risk of getting exploited with lower pay or not being paid at all"(Koba 3).
Overall, the underground economy has both positive and negative aspects to it. It creates consumer spending and helps people to get jobs, but also raises taxes and works with illegal activity.