Toronto           Many politicians and economists like to pretend when they are measuring labor production, wage rates, and GDP that the numbers tell it all.  Others with feet more firmly planted on the ground know better and have argued for a different measure that values ALL work, not just the work that’s easy to count.

Actually, I need to qualify that statement, because in Trump 2.0 that may no longer be true, because many economists are saying that even the count on inflation is now incomplete and they are now unsure about the real numbers.  The Wall Street Journal reported:

The Bureau of Labor Statistics, the office that publishes the inflation rate, told outside economists this week that a hiring freeze at the agency was forcing the survey to cut back on the number of businesses where it checks prices, leading economists to questions the accuracy of its data.

Ok, so maybe the whole US economy is now flying by the seat of its pants, but the real issue I want to shed light on is how the whole world is also not flying exactly, but surviving on the sweat of many millions of informal workers in the shadow economy.  A colleague and friend sent me a visualization done by researchers at Voronoi that ranked the world’s largest shadow economies in 2023.  The fact that China and India were in the top three is probably not a surprise.  The fact the United States is number two on the list is likely something many would like to pretend isn’t true.

China leads with $3.6 trillion or 20.3% of its GDP.  The US is a $1.4 trillion or 5% of GDP.  India is just under a trillion at $931 billion, but it’s 26.1% of its economy which leads the top 13 on the list by a lot.  Indonesia’s informal workers are $326 billion 23.8% of GDP in second and Brazil at $448 billion and 20.6% GDP.  The other countries on the list include Mexico, Germany, Japan, Russia, France, Turkey, Italy and the UK at the bottom with 5.3% of GDP and $179 billion, just above the USA in percentage.

Dorthy Neufeld, the reporter and researcher here, argues that the overall informal economy is now at $12.5 trillion and highest in “emerging” economies.  The figures come from examining cash transactions, since they dominate informal work and business.  These are not just gig workers and street vendors like ACORN is organizing in India, this also includes black market activities, so this could be the tip of the iceberg.  Needless to say, it also means no regulation, no worker protection, and usually no taxes paid to governments on the production of this labor.

Victories we have won in India to formalize the work of hawkers with registrations and social security payments, even though small, start to get at this problem.  Looking at these figures as global, we have to admit, that’s a drop in the bucket.