Nicole Rice

Little Hoover urges leaders to wage stronger campaign against underground economy

By Nicole Rice, Policy Director, Government Relations

Capitol Update, March 13, 2015 Share this on FacebookTweet thisEmail this to a friend

Thirty years ago, the Little Hoover Commission (LHC) warned that state officials must do more to limit the expansion of the underground economy and its activity.  In its report released this week, LHC declared that not enough has been done and urged the Governor and Legislature to more actively fight the state's underground economy.

Broadly defined, the underground economy includes any activities that individuals and businesses try to hide from government licensing, regulatory, tax and law enforcement agencies. Some of those activities are illegal and should be shut down while others are conducted by individuals or businesses who otherwise would be legal operators but for their decision to break the law to gain a leg up on their competition.

In its report, “Level the Playing Field: Put California's Underground Economy Out of Business”, LHC found that the State loses an estimated $8.5 billion or more annually in tax revenue and while the influence of the underground economy runs deep in California, efforts to combat it are disjointed and under resourced.

After a year-long study process that included two public hearings, three public advisory committee meetings as well as more than 150 staff interviews with experts and stakeholders, LHC offered 15 recommendations focused on accountability, enforcement and education to level the playing field for compliant businesses and protect workers from unscrupulous employers.

CMTA agrees that the underground economy is a costly burden on the state’s economy that harms legitimate businesses and seizes important state resources that could be put to better use. We support improved coordination among state agencies, enforcement of existing labor laws and the identification and elimination of barriers to enforcing those laws.

For more information and to review the report, click here.

Capitol updates archive 989898989