This Illegal Activity Has Led to the Loss of 750,000 American Jobs

A U.S. Customs and Border Protection officer displays counterfeit designer shoes

A U.S. Customs and Border Protection officer displays counterfeit designer shoes | Kevork Djansezian/Getty Images

You’ve probably seen people selling stuff on the street at an incredible markdown. Designer handbags, clothes, shoes, even electronics — all can be found for cheap if you know where to look. Most people are aware that these products aren’t usually genuine. They’re counterfeit goods, more often than not. But sometimes, a fake Prada bag is so tempting you just can’t say no.

But what most people don’t realize is just how damaging this underground economy is. Yes, these products hurt the businesses they are ripping off. It goes deeper than that, however. Counterfeit goods impact workers by the hundreds of thousands.

In fact, it’s cost American workers alone 750,000 jobs, and 2.5 million jobs worldwide.

That figure comes by way of a report from NetNames, A CSC Company and a global online brand protection firm. According to NetNames’ report, the global counterfeit economy has grown substantially over the past few decades. “In 1982, the size of the global counterfeit market was estimated at $5.5 billion, compared with $350 billion in 2009 and $1.7 trillion today,” the report said.

This, naturally, creates all sorts of issues for governments. “By slashing business revenues and harming employment, counterfeiting increases the need for welfare payments, while the funds it generates are diverted to organized crime − in turn necessitating more spending on policing.”

Counterfeit goods: Job killers

Descending American dollars

Descending American dollars | iStock.com/jansucko

A lot of people might not sympathize with governments losing tax revenue. But when their friends, family members, and neighbors are losing their jobs? That’s cause for concern. And evidently, the counterfeit economy is and has been actively killing jobs for some time now.

Here’s a visual breakdown, by country, of how many jobs have been killed by counterfeiting, per the report:

Jobs lost due to counterfeiting

Jobs lost due to counterfeiting | NetNames

How does counterfeiting lead to job losses, exactly? The simplest explanation is that when businesses lose out on revenue, they have less to invest and pay people with. “With legitimate sales being squeezed by fake goods, legal businesses are able to support fewer staff,” the report said.

Think of it this way: When you buy those fake Oakley sunglasses on the street from some shady vendor, your money is going toward sustaining him or her, and whoever is manufacturing the fake goods. That money, a portion of which would have gone to the government in the form of taxes to pay for infrastructure and the social safety net, instead is lost. Oakley, the company whose product is being ripped off?

They miss out on revenue. Revenue that would have gone toward paying staff members to design and produce new products.

Cheap, fake, and destructive

$100 notes lay in stacks at the Bureau of Engraving and Printing

$100 notes lay in stacks at the Bureau of Engraving and Printing | Mark Wilson/Getty Images

Of course, it’s hard to pass up a good deal. Say you really want a designer item, but would have to spend a month’s worth of your income to get it? Suddenly, counterfeit or fake goods become an attractive option. Sometimes, we purchase fake items without realizing what we’ve bought. There’s not much you can do about that. But it’s not hard to see how the counterfeit economy perpetuates itself.

Fake items run the gamut, too. It’s not just fake purses, watches, and sunglasses. Almost any product or good you can think of has a fake counterpart. That includes things like protein powder. Even workout videos.

While some of us are going to continue buying cheap knockoffs for whatever reason, the important takeaway from the NetNames report is that those purchases aren’t victimless. Though you probably aren’t going to send someone to the unemployment line by purchasing a Die Hard Blu-ray on the street, economy-wide, these decisions cause problems.

What can you, as a consumer, do to avoid purchasing a counterfeit product? Be vigilant. Do your research, and know what you’re looking for. Buy from licensed or well-known retailers. This won’t matter much for a pair of $5 sunglasses off the street, which you are knowingly buying.

But if you’re hoping to get a good deal on a genuine product? Be sure you know what you’re getting, and who you’re getting it from.

Follow Sam on Facebook and Twitter @SliceOfGinger

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