Whenever a business operates outside the legitimate economy several problems arise. First and foremost when a business attempts to conceal its activities they do so to avoid taxes, safety regulations and required insurance policies (i.e. unemployment insurance, workers' compensation, etc.).
Doing so exposes the employees of that business to the possibility of uninsured injuries, denial of unemployment benefits and eliminates any incentive to operate their business safely. Uninsured injuries cost the Commonwealth and its legitimate businesses millions of dollars each year. Similarly, avoiding unemployment insurance (UI) creates unfunded liabilities that cause artificially high UI premiums.
These workers may also be denied access to health insurance as their unscrupulous employer would not be contributing to a health care plan.
Where an employer goes to such lengths to avoid their responsibilities, it is safe to assume that such a company is paying low wages and is exploiting workers who are not inclined to report violations to authorities.
Such businesses also seek to avoid paying their fair share of taxes. Such revenues should be collected to help our schools, repair roads and bridges and provide services to the people of Massachusetts.
When added together, operating outside the law allows these businesses to have an unfair advantage by way of illegitimately lower costs and can therefore underbid all others. This takes business away from law-abiding businesses and their employees who are trying to make an honest living.