Underground economy causes significant harm in California.

CALIFORNIA'S effort to root out the underground economy--where workers often are exploited and businesses evade taxes and other requirements--is a battle against a force that costs the state $6.5 billion annually.

In the underground economy, workers often work long hours for less than

To level the playing field and protect workers, Gov. Arnold Schwarzenegger and state legislators created the Economic and Employment Enforcement Coalition in 2004. Made up of investigators from the Labor and Workforce Development Agency's Employment Development Department and Department of Industrial Relations along with the U.S. Department of Labor and the Contractor's State License Board, the EEEC is focusing on seven industries with historically high rates of labor, tax and licensing violations. On the target list are agriculture, construction, car wash, garment manufacturing, janitorial services, horse racing tracks and restaurants.

Workers employed by unscrupulous businesses in these industries are destined to remain poor because they are not being adequately compensated for their labor. Without fair wages or payments being made into the Social Security system, they will never be able to work their way out of poverty, and that places a burden on the rest of society. In addition, businesses that follow the rules for the overall good, as well as their own, will be put out of business because they'll lose jobs to lower-bidding illegal competitors who don't have the same overhead.

Complaints and denials

When they are uncovered and held accountable for their illegal operations, the cheaters often complain that the state is putting them out of business and destroying job opportunities for poor, unskilled workers. Sometimes they go to the media and claim they're being treated unfairly, or simply deny they are operating illegally.

But it's legitimate businesses, workers and the rest of us that have a problem with illegal operators. While tax-paying businesses rightfully complain that they can't compete with those who pay little or no payroll tax or don't carry workers' compensation, the fact is that we are all subsidizing these illegal operators.