The novel coronavirus’ freeze-frame effects have forced individuals to take immediate stock of how they were making a living and to adjust accordingly. That includes those who attach their livelihoods to the underground economy.
Many small business owners have suffered financial devastation beyond their imaginings. And while Memphis and Shelby County are inching beyond safer-at-home restrictions, the road to recovery still is fuzzy and uncertain.
For non-taxpaying business owners living by their wits, conditions have been crippling as well. While federal stimulus funds offer the promise of some relief for some registered businesses, that’s not so for entrepreneurs who have lived unincorporated and untaxed for years.
And, so goes the work force, so goes the fate of cash-only entrepreneurs.
“I make a lot of money as long as people are working,” said a mechanic, who calls himself, Mario, not wanting to be identified for this story.
“Almost 20 years ago, I found a way to eliminate all the overhead of actually running a mechanic shop. I didn’t have any money. My mobile mechanic service has been extremely lucrative over the years. But people don’t call me to repair their cars while they are at work because they aren’t working now,” he said.
“I went from making thousands a week to almost nothing. There is no stimulus for me because I stay just under the radar. The government won’t help me because they don’t know about me.”
There is no telling how many businesses are operating within the underground economy, said Mark Yates, president/CEO of the Black Business Association of Memphis. “We call it the ‘side hustle.’
“There’s the lady with the one beauty shop chair in the back of the house, and you go through the back door to get there. Or whether, it’s the entrepreneur selling items out of the trunk, we have always had an underground economy. Our neighbor had a detail shop before it was even called ‘detail.’”
COVID-19 could care less whether a business is legitimate. Its effects, including death in the most severe scenarios, warrant safety precautions.
When interacting with clients, including those who are friends he has known for years, Mario said he wears a mask “because I want to keep myself safe, and I want to keep my children safe.
“Also, it’s good to go ahead and do what is recommended so we can keep coronavirus infections down. The sooner we get this under control, then the sooner people can get back to work. That means I can get back to making money.”
The needs to be safe and pay the bills hit home for an in-home hairdresser identified as “Janice” for this story.
“I install weaves, do all kinds of braids and sell different types of hair in my apartment,” said Janice. “Although it’s just a really small business, my regular clients pay a lot of money for my services.
“The stimulus checks for my customers is not being spent on their hair because rent and car notes have to be paid. I’m the last one on the list. My savings are almost gone. After this month, I really don’t know what’s going to happen.”
Since the coronavirus outbreak, Janice said she has had only one client in at a time.
“Whether they are shopping for hair bundles, getting their hair braided, coming in for eyebrow-shaping or some other beauty service, I will only have one person in my home at one time,” she said. “I keep sanitizer, wipes and even extra masks, if they don’t have one. During all transactions, I wear a mask and I require the client to wear one also.”
Mario’s ‘side hustle’
Mario and his brother grew up with a crack-addicted mother in North Memphis. He dropped out of Bolton High School at 18.
“When I was in the eighth grade at Snowden, I was on the honor roll, in the Chess Club and participated in CLUE,” he said. “In the ninth grade, I went to East High School. When I got thrown out the city schools for selling drugs, we moved out to Raleigh.
“I was bussed to Bolton High School up in Arlington. The city had free lunch, but county schools had reduced lunch. I didn’t have $.35 a day for lunch, so I had to hustle. I sold cigarettes, gambled in the bathroom – did whatever I had to do.”
At 19, he fathered his first child. At the time, selling drugs was all he “knew how to do.”
“When I caught a serious case in ’05, I got off with probation,” Mario said. “But one condition of my probation was that I had to go back to school for my GED. I went to Vo-Tech for auto mechanics, but we didn’t do too much but work on the motor of a lawn mower. I didn’t stay in there long.
“I still don’t have a GED. As long as I was showing up to probation every month and paying my money, nobody said anything about it. I learned how to fix cars from a guy named ‘Boo’ who lived across the street.”
Now the father of six, Mario, who lives in Orange Mound, said most of his business is with people who were working. Major repair jobs were done at their residences, and other minor work at their places of business.
“But now, people aren’t calling for repairs. Since they are not working right now, the car doesn’t have to be fixed right away. I have six children and a mother and grandmother who depends on me. Nobody is working but me.”
All of his friends have a “hustle” or undocumented business to pay the bills, he said.
“Everybody I know got a record, and it’s hard to find a job that pays enough. I got a partner that sells purses out of his trunk.
“Another partner of mine sells women’s lingerie. He used to do a lot a business in the beauty shops when they were open. Perfume, mace, CDs and DVDs – you can make a business out of selling anything. That’s how we been doing it for years, right or wrong.”
Janice’s ‘side hustle’
After graduating from college with intentions of being a teacher, Janice had trouble finding a job. She liked doing hair and decided to supplement her employment at a day care by doing hair in her home.
“My business just grew from there,” she said.
“I make real good money doing hair. For black women, hair is big business. But there are so many good businesses to go into.”
She has girlfriend whose mother makes cakes in her home.
“Most of the time, they sell as many as 100 cakes a week at $30-40 a cake. Another one of my friends makes jewelry and sells it at home. The Internet makes it easy to advertise what you do.
“We are always looking for something to sell to pay bills. We can’t wait for people to get back to work. We’re all broke right about now.”
The BBA’s Yates notes that there are 39,000 registered African-American businesses.
“When you consider that we can’t just walk into a corporation and get a middle management job making $87,000, for 30 years, and retire with a 401K and a pension, yeah, we have to open our own businesses,” he said.
“We still make 75 percent, if not, 65 percent, of what whites make. We have to make up that money somehow. …
“What I need now is for people in the underground economy to let me help them get legitimized,” said Yates. “We can place a $20 ad on Facebook and hit their demographic, expanding the business. People can pay with Cash App, Bitcoin, Pay Pal, Google Pay, Apple Pay, Square, and all sorts of means.
“These are still cashless modes of commerce, still unregulated by the government. There are people making seven figures on Instagram. Black people need to be a part of that online economy.”