But those are anecdotes. Is there any hard data on the underground economy? Some. A 2011 paper (pdf) Richard Cebula and Edgar Feige estimated that as much as “18-19 percent of total reportable income is not properly reported to the IRS." That's as much as $2 trillion in underground economic activity, with about $500 billion in taxes that aren't being paid to the government.
And here's another suggestive piece of evidence that the shadow economy has been growing during the downturn. The amount of U.S. currency in circulation has been soaring in the last six years, from $803 billion in 2007 to $1.18 trillion in March. Some of that reflects growing overseas demand for dollars. But some of it could reflect growth in unreported economic activity in the United States — people getting paid under the table in cash, say.
If the shadow economy is in fact growing, that has upsides and downsides. It's certainly a good thing that people are finding ways to survive during a brutal downturn. But it's yet another sign that the formal economy is utterly failing to create enough jobs for everyone.