Under the Table
Unreported, untaxed, underground income on the Island long has been seen as playing a significant role in the overall Vineyard economy. Now an Island economic profile prepared for the Martha’s Vineyard Commission and the Island Plan has taken a closer look at the Vineyard’s underground economy and its wider implications for Island life.
The profile’s author, John J. Ryan of Development Cycles in Amherst, conservatively estimates that the size of the Island’s underground labor market at one thousand, two hundred jobs and thirty-four million dollars in annual revenue — equivalent in size to the Island’s reported accommodation and food services or retail industries.
He also observes that aspects of the Island economy tend to encourage the practice of working under the table.
Reflecting the higher cost of living on the Vineyard, jobs on the Vineyard tend to pay higher wages than in other parts of Massachusetts. The wage differential has served as a magnet for foreign workers.
Further, the relative lack of large employers and the seasonal nature of the Island’s economy has encouraged self-employment among Vineyarders, as well as the common practice of contract labor for Islanders and commuters to the Island.
These work arrangements tend to lend themselves to the underreporting or non-reporting of income for taxes. And that accounts for much of their appeal.
On an Island with a yawning gap between the well-to-do and those simply trying to survive, the justification among the latter for working under the table is easily grasped. What harm is there, they could ask, in the quiet payment of cash for work that otherwise wouldn’t exist?
But there is harm, and it goes beyond the taxes that aren’t collected and the unfair burden on those who do pay their taxes.
“. . . The chief significance of the underground economy may be in lost community stability,” Mr. Ryan writes. “Workers stay for shorter durations. Since income is often spent elsewhere, the value of that labor does not circulate in the local economy as fully as it might.”
Residents who work for cash cannot verify income to buy homes. And employers who pay cash are less likely to invest in worker training or capital investment.
In essence, the decision of employers to offer, and workers to accept, money under the table has long-term implications for the Vineyard.
The selfish capitalism that has brought the Island to this pass is unlikely to challenge or solve the problem. What instead is needed is conscious, coordinated efforts between the private sector, nonprofits and local government to foster the creation of higher-wage, more stable employment.
Although those efforts may not be cheap, they undoubtedly will be far less expensive for the Island than continuing to drift further into the instability of an underground economy.
This is a key challenge for the commission as it continues to develop the Island Plan.