Immigration and informalization of the economy: Enrichment or atomization of community

Abstract

The informal economy consists of those enterprises or individual workers which escape government regulation of wages, hours, labor safety and health, taxation, zoning or immigration. Estimates of the size of the informal economy loosely cluster around 6% to 12% of the GNP. Indicators of informalization are the proliferation of micro-enterprises, and heavy increases in self-employment and unpaid family workers. These indicators are strongest in major U.S. urban counties with large foreignborn populations. Providing the large labor reserve amenable to informalization has been the heavy admission of low-expectation, non-English speaking foreign workers since the late 1960s, and the subsequent inheritance by many of their U.S.- born children of similar labor market disadvantages. Abetting this transition have been deliberate government cutbacks since 1980 on enforcement of labor, immigration, safety and health standards. This article reviews the major ideological perspectives on informalization, which range from open admiration and encouragement of it as a force for economic competitiveness, to apprehension and condemnation as a form of state-condoned exploitation and an obstacle to sound development, greater income equality, community cohesion and rational economic planning.