Tough financial times slow underground economy

    The recession is hitting Philadelphia area residents of all ages and professions. The tough financial situation is also putting a crimp in the “underground economy,” those who don’t pay taxes or get permits, but who sell all manner of things like t-shirts, CDs, DVDs, and even illegal taxi rides. WHYY’s Elizabeth Fiedler has more.

    The recession is hitting Philadelphia area residents of all ages and professions. The tough financial situation is also putting a crimp in the “underground economy,” those who don’t pay taxes or get permits, but who sell all manner of things like t-shirts, CDs, DVDs, and even illegal taxi rides. WHYY’s Elizabeth Fiedler has more.

    [audio: reports20090217underground.mp3]

    Transcript:

    At Broad Street near Girard, a bustling underground economy floods the streets of North Philadelphia side-by-side with the legitimate convenience stores and fast food places.

    Shayya Bey carefully lines up hats, barrettes, gloves, and perfume on a table made out of a piece of wood on some plastic milk crates. Bey says he’s been in business 15 years. And this is the worst his sales have ever been.

    Bey: “The last couple years it’s slowed down and last couple months since we had this recession things it’s really slowed down.  Big Time.”

    Barrettes for sale by an illegal vendor at Broad and Girard
    Barrettes for sale by an illegal vendor at Broad and Girard. Photo by Elizabeth Fiedler

    Bey says he’s making less than half what he used to and is having a hard time paying his bills.

    Bey: “If you wanted to go out dancing once a week or something like that a couple times a week, or if you wanted to go out to dinner you can’t do anything like that no more. That’s out, that’s out of the question.  None of that is going on – not on what you’re making right now. It’s just not happening.”

    Hats for sale by an illegal vendor at Broad and Girard. Photo by Elizabeth Fiedler.
    Hats for sale by an illegal vendor at Broad and Girard. Photo by Elizabeth Fiedler.

    A man who sells scented oils a few feet away says his business is down too.  He says he can’t get another job for the same reason he entered the off the books business in the first place, he racked up a lengthy criminal record as a young man.

    Blocks up Broad Street at Olney, Tony Williams is standing near the corner trying to pick up a passenger.

    Williams says he’s been operating a one-man illegal taxi business for seven years. He has seen his business drop from 15 passengers a day to only 8. He says it is competition – there are a lot of hack taxis available these days – and recently people have been walking or taking the bus because of the bad economy.

    Williams: “There’s less of everything: less people riding, there’s less money, economy has just taken a… has just hit us real hard. It’s hitting everybody real hard.”

    Williams says he works as an illegal taxi driver to supplement the money he makes as a machine operator.

    Williams: “I work four days a week. I come out here the other three days a week because my job is not really giving me overtime so I come out here. This is considered my overtime.”

    Williams says his fare is about the same as a legitimate taxi driver, but he makes more money because he doesn’t pay the fees for city training and licensing like an above-the-board cabbie.

    Illegal businesses are unfairly competing with legitimate business owners who pay city fees, says Licenses and Inspections Commissioner Fran Burns.

    She says L&I inspectors are aware that unlicensed business is being conducted. Right now though the department relies on complaints to weed them out.

    Burns: “We’re working on doing a better job of actually having programmed inspections which would mean we’d have inspectors actually cover a certain section of the city and they would pick that up on their own.  We do do pick ups now but right now generally we are basing our inspections with vendors on complaints.”

    The illegal taxi drivers and vendors are part of a much larger underground economy. Yale University Professor Elijah Anderson spent decades studying urban life in Philadelphia.

    He says in poor inner city communities a separate economy revolves around low wage jobs, welfare payments, and off the books transactions. When the jobs or welfare dollars disappear, Anderson says people turn to the underground economy.

    Anderson: “The poverty that we see to some extent is from the jobs that have left and people don’t have the opportunities they once had and people make do whichever way they can. And when the regular economy doesn’t work for people sometimes, they will make it any way they can. And when the regular economy doesn’t work, the irregular or underground economy often picks up the slack.”

    Anderson says as the recession continues it may be harder for some people in these communities to get a legitimate job, which may lead them to join the underground economy.

    Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

    It will take 126,000 members this year for great news and programs to thrive. Help us get to 100% of the goal.