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Workers Without Rights

The informal economy produces legal goods and services that are not effectively regulated. Such activities can give rise to abuses by employers who fail to respect basic labor, safety, immigration, and tax laws, leaving workers without rights. By definition the informal economy is hidden “under the table” and “off the books.” However, by comparing different sources of employment data we can identify industries where a significant share of jobs appear to be unreported.The estimated size of this labor force in Los Angeles County is 811,000 workers. Using a conservative estimate of $7,200 a year in average earnings, the amount of legally required but unpaid payroll tax and insurance benefits for workers in Los Angeles County is over $1.1 billion per year. The amount of Earned Income Tax Credits that are unavailable to them because of their informal status is estimated to be in the range of $1.4 billion a year in Los Angeles County.Employers of informal labor appear to be found most frequently in a variety of manufacturing industries (paper, lumber and wood, metal, glass and concrete, food and tobacco, textile and apparel, plastics), as well as agriculture, construction, private household services, miscellaneous retail, and restaurants.It is inconsistent with a sustainable economy for Los Angeles County. It entraps workers at the fringe of the labor market in jobs that often have very low wages. And it allows businesses to gain short-term competitive advantages at the risk of jeopardizing the long-term economic growth of the region. Four broad strategies that could help raise the floor under Los Angeles’ economy by bringing more workers into the primary labor market are: (1) increased enforcement of existing labor regulations, (2) more education and training (including English skills) for under-skilled workers, (3) recognition that union-organizing campaigns among low-wage workers may help formalize the employment conditions of informal employees, (4) immigration amnesty for workers who have tenure in the Los Angeles economy.