Cynthia operates an informal daycare out of her apartment, catering to parents who work the late shifts in factories and warehouses. Walter purchases bootleg cigarettes for $8 and then resells them individually for 50 cents. Barbara used to sell bootleg DVDs but when streaming services popularized, she shifted to selling candy in large office buildings.
These three are part of the underground economy and are featured in the new report “Survival Economics: Black Informality in Chicago” by authors Nik Theodore, a professor at the University of Illinois-Chicago and Richard Wallace, executive director of Equity and Transformation (EAT).
High unemployment rates on the city’s South and West sides have pushed many residents into the informal, or off the books, economy. Decades of few job opportunities, disinvestment and deindustrialization forces people into survival mode without formal training or licensing. Street vendors, auto mechanics, childcare providers and movers are some of the jobs.
The informal economy is visible and invisible at the same time. A person selling “loose squares,” or individual cigarettes, underneath a CTA station is seen but not fully understood to be part of an economy. Unemployment isn’t the end of the story; these are people who still need money while they are locked out of the labor market.
The report surveyed 56 people — 35 men and 21 women — who are actively participating in the informal economy. These workers demonstrate creativity and resilience as they are often involved in multiple activities to earn money. The most common work was housecleaning (52%), selling loose cigarettes (38%), washing cars (35%), doing yard work (35%), taking care of the elderly (34%), working as a handyman (34%), babysitting (32%), selling food (30%), working as a mover (30%) and selling personal-care items (30%.)
“I don’t celebrate this. I realize there is creativity and ingenuity, entrepreneurship and drive to make it. While I understand that folks are trying to hold onto some dignity in the work — and I celebrate the dignity — this is not an achievement. This is a sign of a failure, and that’s where the public policy story comes into play,” Theodore said.
Capitalism, a criminal justice system that locks people out of work because of conviction records and the public health system are among the systems that have failed workers in the informal economy, Theodore said. “Those failures have allowed this economy to persist and become as large as it is.”
Wallace said the informal economy also represents the failure of a social contract. His organization, EAT, works with people formerly incarcerated and those in the informal economy. The demand for capital puts people at risk, he said.
“The system should produce jobs so people can buy the things they need. The second the system stops producing the jobs at scale, people are going to have to resort to systems of informality to survive. The demand for capital doesn’t stop at an indication of employment,” Wallace said.
Informal workers aren’t making a lot of money. Doors for employment and to craft a livelihood daily to earn wages have been slammed shut. In the survey, 48% said a job with a regular paycheck is available to them. Only 29% of respondents said that they worked for a company where they received a regular paycheck in the last year. For many, those paychecks weren’t secure because they were employed in temporary jobs through day-labor staffing agencies.
“African Americans who have been pushed into the informal economy by a dearth of employment opportunities are further penalized by the perception of illegality that envelops these activities. In some cases, they face fines and arrest simply for engaging in informal work. It is no wonder that, as interviewees noted, Black jobseekers become demoralized,” the report says.
Wallace said credentials, such as a certification, for a job can be a barrier. He said having people pay for those credentials on a sliding scale should allow increased entry into jobs. Court fines and fees for people in the criminal justice system also creates a cycle of financial despair, he added.
“Free college, free health care, ideas like guaranteed income — unless we begin to explore some of these things, we won’t get to the racial wealth gap in Illinois,” Wallace said.