Underground - we can be happy underground

The Democrats will never get any traction on foreign affairs so they need to focus on the economy if they want to defeat Bush for re-election. The economy continues to grow as worker productivity has soared; the downside is that companies don't feel pressure to add workers. So the Dems hammer on job losses, hoping to gain political advantage.

Fair enough. Unemployment is a lagging economic indicator and, if the economy continues to rebound, eventually the job market will return. However, an interesting report in the New York Times indicates that the employment situation may not be as dire as portrayed. In "Look underground and unemployment is low" it's suggested that a lot of jobs may have simply moved off the books:

But the number of such potential workers [e.g. in prison] is far exceeded by the total of those working off the books — whose labors would drive down the unemployment rate significantly if counted. That is especially true by historical standards, because the amount of underground economic activity has been expanding so much. The International Monetary Fund, in a global survey of underground economic activity last year, found that this sector has been growing in the United States for 30 years. The authors of the I.M.F. report have estimated underground economic activity at 8.6 percent of gross domestic product in the United States, up from 6.7 percent in 1990 and just 4 percent in 1970. [Emphasis added]

If true, this could undermine the Democrats' hope for voter anger over unemployment; that is, people are working, but just not paying taxes. In a bizarre twist, the phenomenon of underground labor could actually work in the Republicans favor since it would serve as a possible example of how excessive taxation drives work underground and thereby deprives the government of tax revenues. This is a story to keep an eye on.