California's Underground Economy

Fresno, California Stocks dive ... unemployment rises ... the housing market crumbles. But the underground economy is thriving.

Jeff Miller with the State License board said, "A lot of homeowners hire unlicensed guys because they do charge cheaper prices. They act in what we call the underground economy."

In California the underground economy is estimated to be a $100-million dollar business. It encompasses many different types of jobs ... including landscaping, construction and even restaurant work. It has different names ... like under the table work ... or cash only. Basically it's off the books ... no taxes ... no insurance ... no licenses ... but according to the Fresno County District Attorney's Office ... it brings big problems.

Edith Treviso said, "There's a lot of frustration from the legitimate contractors that are out there trying to make money."

Tom De Lany has been a landscape contractor for more than 30 years and owns All Commercial Landscape Service in Fresno. He has about 100 employees who do commercial maintenance for cities, apartments and shopping centers. But he says the sudden boom in the underground economy means unfair competition from people not licensed or insured.

"Their bids are half of what ours are. Because they have no overhead because of workman's comp, liability insurance, federal withholding, that type of thing and its impossible to compete with," said De Lany.

DA investigators held a sting in Fresno County in October targeting unlicensed contractors. It is illegal for them to bid on jobs over $500.00 ... 27 people were arrested.

Investigators say unlicensed contractors put homeowners at risk. They may not be qualified to do the jobs they bid on ... and could do more damage to your property. If they're injured at your house ... you could be liable for their injuries and hospital bills.

Chief District Attorney John Savrnoch said, "Its tough enough to survive as a homeowner without getting ripped off by an unlicensed contractor."

But what about the unlicensed contractors? Many worked legally for a company with a contractor's license when the housing boom went bust. They're now left with no jobs and not many options.

A man we interviewed ... who does not want to be identified. He was a custom Tiler for 25 years but has been unemployed for more than a year. He is angry that hardworking, skilled people like him are being targeted by authorities during these tough times.

Alex an unemployed worker shared his opinion, "Maybe start going after something else that's illegal instead of unlicensed contractors because everyone's trying to make a living right now, and it's hard to do. A lot of people are out of work and it's terrible."

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