Please help me with these questions, thanks! 1. what are the advantages of worki
ID: 1189063 • Letter: P
Question
Please help me with these questions, thanks!1. what are the advantages of working off the books from the viewpoint of the people involve ?
2.How might the failure to measure off-the-books activity affect economic policy decisions?
3. How might off-the-books work affect the statistical discrepancy in the national income accounts? Case for Discussion LAID-OFF STEEL WORKERS JOIN THE UNDERGROUND ECONOMY HOMESTEAD, PA A half-dozen men lounge on metal folding chairs outside a storefront on Ann Street, sweating in the muggy afternoon air and talking baseball. A pay phone rings inside, and a young man runs to answer it. Moments later, he speeds off in a long, beat-up sedan The man is about to cheat the govemment He and the other men drive people around town for a fee, but they don't pay any taxes on the fares they receive. What's more, they dont see why they should. Most of the men used to work at the sprawling Homestead Works a half block away. Now that the steel mill has closed, their car service allows them to make a living. "It ain't bothering anyone. it ain't stealing." says Earl Jones, who was laid off last December after 36 years at the mill. How much does he make? '"Ain't saying. he replies with a smile. The men are part of a vast underground economy made up of people who work "off the books for cash, From the tired mill towns of the Midwest to the oil patches dotting the Southwest, the underground thrives. In communities that have suddenly lost a major employer it helps those who were laid off make ends meet, and it helps keep towns like Homestead alive. The number of Homestead residents with off-the-books livelihoods began to increase in the early 1980s when USX Corporation's Homestead Works, which employed about 15,000 at its peak, started to lay off workers in droves. The mill's few remaining workers lost jobs early in 1986. For most residents here, where only half the people have their high-school diplomas, the mill was all there was. After they were laid off, many older workers retired and some of the younger ones withdrew their savings and migrated south, chasing dreams of work in more prosperous states. But many others stayed, hound by their unmarketable homes, their families, or a strong sense of community. Unable to find legitimate jobs, they have parlayed their handyman skills underground One former mill worker says that half the people he knows are working off the books. For the most part, they are intensely proud people who hang the American flag from their neat front porches on holidays and respect the law, believing strongly in right and wrong. They definitely don't like the underground's seamy side-thefts and drugs. But their changed circumstances have altered the way many of them think. You tell me. Your kids go to bed crying at night because they're hungry. Is off the books going to bother you?" asks a former steelworker. SOURCE: Clare Ansberry, "Laid-Off Steelworkers Find That Tax Evasion Helps Make Ends Meet The Wall Street Journal, October 1,1986 1. Reprinted by permisson ot The waa Street Journal, Dow Jones & Company, Inc., 1986. Al Rights Reserved Worldwide. QUESTIONS 1. What are the advantages of working off the books from the viewpoint of the people involved?
Explanation / Answer
Solution :
1) The concept of working off the books means that a person is being compensated in cash for services performed, but the payments are not recorded on the books of the employing business. The business offers this sort of arrangement in order to avoid paying any payroll taxes, as well as to avoid paying for workers' compensation insurance . Working off the books is advantageous because from the people point of view they dont have to pay taxes and also do not face strict employment regulations and it is an easy source of employment when finding regular employment is difficult .
2) Off the books affects the government's ability to fund resources by creating a tax gap. Tax gap refers to the loss of tax revenue a government makes due to unreported income. Off the books employees do not receive any social security benefits such as minimum wage and fair treatment . Off the books employees often resort to crime and other illegal activities and may cause social unrest if left unchecked . Thus the growth of off the book employees affects the economic policy decision making of the government due to unreported income .
3) off-the-books work results in discrepancy between national expenditure and income at the aggregate national level .