> This meant hospitals and other public services went underfunded.

I don't buy it.

At the wage these folks would make if on the books (ie, minimum wage) they'd pay no or almost no taxes.

So we're only talking about lost payroll taxes. Yes, the part of that that goes to public services is lost, but the people on whose behalf they are paid are also not using public services to a large degree.

I'm sure it's not exactly a wash, but for the most part public services are paid for by high wage earners.