Toymaking gnome slaves, yes, Mikey remembered hearing about something like that in Muggle Studies once. Gifts for Muggle children, as far as he remembered. Though how they got away with it regulation-wise, he had no idea. Their house-elves were better protected than that and they enjoyed being worked to the bone. "Different sub-species, perhaps?" he offered with a shrug. Maybe Jon would know. Or Pete. There was always the possibility of them being migratory too. Well, as long as they could swim.
Magical ones did seem like a much better plan overall. Or at least a less complicated one. "Are you sure you don't want to be a fairy?" he said innocently, furrowing his brow as he studied one of the pictures. "You looked quite comfortable with sparkly wings at Halloween."