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it is a combination of both, really.
The underground economy pays no taxes. While it is a sad fact now that since 47% of wage earners pay no federal income taxes making it perhaps not so uncommon, the underground economy pays no medicare or social security tax either. In avoiding the system, they still consume government resources. Yeah, that pisses me off.
The economics of the situation are indeed complex and hourly rates go far beyond this issue. Unions, skilled vs. unskilled, regulation, minimum wages....all come into play in that determination, so I don't think there is an issue of corporations being able to do much of that. Corporations certainly look to keep their salary obligations to a minimum and play within the rules as best they can to seek whatever advantage they can.
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