Underground Sex Trade Mirrors Business Practices: Study

They pit employees against each other to maximize performance, set financial quotas and are adapting to a rapidly changing technological landscape.

That may sound like a description of corporate executives or other business managers. It applies as well to the illegal sex trade, according to a study published today by the Urban Institute in Washington.

“Many pimps had a business savvy and they knew what they needed to do to maximize profits,” said Meredith Dank, the study’s lead author and a former commodities analyst. “They saw themselves as managers, as business owners, as entrepreneurs.”

The conclusions are based on interviews with scores of pimps, prostitutes and law enforcement officials in eight U.S. cities. The sex trade in seven of those U.S. cities, Washington, Atlanta, Dallas, Seattle, San Diego, Miami and Denver, totaled $975 million in 2007, or $1 billion today in inflation-adjusted dollars, according to the study. Kansas City, Missouri, one of the cities examined, wasn’t included in the economic analysis.

Funded by a $499,000 Justice Department grant, the study is one of the first to probe the business side of the sex trade. It relied on more than 260 interviews of police, pimps and prostitutes, the Urban Institute said.

Dank, who worked as an analyst for Tokyo-based trading firm Mitsui & Co. and in public relations for Sony Corp. before earning a doctorate in criminal justice in 2009, interviewed 73 pimps, all jailed on federal and state charges, and three-dozen prostitutes in 2012 and last year for the 340-page report, “Estimating the Size and Structure of the Underground Commercial Sex Economy in Eight Major U.S. Cities.”

Mobile Technology

She said that understanding the business side of the illegal sex trade should help authorities better prevent and combat it.

The sex business has become more reliant on the Internet and mobile technology to recruit prostitutes and customers. More than half of the pimps surveyed said they used some form of online advertising, the study found.

More than 70 percent of the pimps said they traveled to cities hosting major events, such as the National Basketball Association playoffs, for the large crowds of men. They even visited the sites of natural disasters because those areas were often flooded with workers who had cash to spend, Dank said.

Pimps employed an average of five prostitutes, and street gangs were increasingly involved, the study found. The pimps treated women as a commodity “like gold, platinum,” one said.

Established Quotas

Some pimps established quotas for their workers and others intentionally fueled competition between their prostitutes. “I had a quota of $600. If they came back with $550 or even $599, she had to just go back out,” one pimp reported.

Although the economic downturn pushed down prices, most of those surveyed “shared the sentiment that a high market demand for sex always exists,” the study said.

Competing pimps weren’t as cut-throat with each other as researchers had expected. “Many pimps viewed it as a brotherhood, a code they abided by, where they would help each other out,” Dank said.

To contact the reporter on this story: Del Quentin Wilber in Washington at dwilber@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net Joe Sobczyk

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.