Not even prostitution is immune to economics of supply, demand

By Abigail Goldman

Sunday, Dec. 14, 2008 | 2 a.m.

The pleasure of Stacie’s company used to cost $450 an hour, but no longer. Her clients were capped at 35 and older; today she’s taking almost anyone. Sex acts once off the menu are suddenly back on — recession specials, served with a side of shrugging compromise.

If she doesn’t do more for less, Stacie says, another prostitute will. And her weekly income is still down by half.

The illegal prostitution economy in Clark County is a multimillion-dollar beast fed by a black market so diverse that it’s impossible to pin down. On one hand, midrange prostitutes like Stacie say they’re being crippled by the economy. On the other, high-end call girls claim they’re not feeling much pain. And the women charging the least reportedly are making the most these days — counterintuitive in an industry where bargains come with risks.

Consider the work of sociologist Sudhir Venkatesh, who surveyed hundreds of high-end prostitutes in New York and discovered that 40 percent of “trades” in the sex economy never went beyond light petting or kissing.

In Las Vegas, the economy’s effect on call girls is even more complicated: The bulk of clients — or johns — here are from out of town, tourists or businessmen who spend days in convention halls and nights in hotel rooms with to-your-door entertainment. These men are bread and butter for local prostitutes, provided the clients come to town. And anybody in the hospitality industry — here that illicitly includes call girls too — can agree that fewer men are flying in, with less money to spend.

Meanwhile, more women reportedly are getting into the business, which creates a classic supply and demand squeeze. An escort agency owner told the Sun he’s getting about 40 interested applicants every day, the majority of whom are women running from the wreckage of lost finance jobs.

Now fold another factor into that dynamic: When the economy is bad, when people feel their mortgages closing in, they seek comfort: alcohol, cigarettes, gambling, pornography and perhaps prostitution.

When all these elements collide in the nebulous economy of escorting, a trend emerges: The Clark County call girl economy has a tipping point — about $650.

In Vegas, prostitutes who charge between $600 and $700 are being hit the hardest. The women (and the smaller number of men in the business) who charge in the $200 to $300 range are doing the same business as before, if not better, according to Susan Lopez, founder of the Sin City Alternative Professionals’ Association for local sex workers. And women who charge thousands of dollars for multi-hour appointments tell Lopez, and the Sun, that they’re not really being affected at all.

Although this is no scientific study — and people should be wary of any numbers that claim to definitively capture any element of the sex-for-pay market — the tipping point does make sense: People tightening their belts are downgrading to cheaper service; people who don’t need to tighten their belts aren’t really doing it at all. If you can buy a Bentley today, the logic goes, you’re probably going to be able to buy one tomorrow.

Or maybe you’ll buy an evening with Rebecca. She’s been a call girl in Las Vegas for several years, after leaving a job in finance behind. Winters are always slow, she says, but overall, the money is good. How good? Her best month was $32,000. An average month is more like $15,000.

“I get a lot of doctors and lawyers and they don’t even blink,” she said. “By January or February I’m fully expecting to raise my rates.”

Her rates, for now, are $2,000 to start. Overnights cost $4,000. Travel and multiple-day excursions are negotiable.

If you don’t believe people would pay that kind of money, consider the case of former New York Gov. Elliot Spitzer, who authorities allege spent $80,000 on escorts in one year, despite having a lot more to lose than the cash.

Call girls difficult to count

Calculating Las Vegas’ call girl economy is, at best, a guessing game. Academics have estimated there are anywhere from 3,000 to 3,500 indoor working prostitutes in Las Vegas at any given time. Imagine, however, that only a fraction of them, say, 1,000, are working year-round. Now imagine that each sees only one client a day, and charges only $300. You still have an annual economy of $109.5 million. Imagine the number of working girls is even smaller — 500 prostitutes charging $250 a day. That’s still more than $45 million a year.

Trace our economy backward from bust to boom and you’ll hit the glory days that helped create the world of high-cost call girls. A glut of new millionaires, paired with a sex industry that seamlessly got online and off the streets, gave birth to agencies such as the Emperors Club — Spitzer’s alleged company of choice, where the cheapest dates still commanded $1,000 an hour.

Writing about this subject, The Wall Street Journal cited a study conducted by wealth research firm Prince & Associates, which surveyed 661 people rich enough to own private jets and found 34 percent of the men and 20 percent of the women had paid for sex. Now extend that group to people who are rich enough to own, say, a beach house, or a Porsche, or their own firm — and you get an idea of just how big the market could be.

Blogging on The Economist Web site, economist Allison Schrager notes that the prostitution market is countercyclical; less attractive and cheaper prostitutes, while available, aren’t always desirable. Prostitution, Schrager says, appears to be what’s called a “Giffen good” — a product for which demand rises with price.

Charging too little has dangers

When financial panic intrudes on the prostitution world, escorts often lower their rates in response, according to Amanda Brooks, author of the Internet Escorts Handbooks. That’s a mistake, she says, not just because established higher-end prostitutes are more immune to economic fluctuations, but because lowering rates changes the kind of clientele call girls attract.

Women who are getting into the industry for the first time also tend to price themselves too low, Brooks said, because they don’t understand that higher rates mean higher quality clients. There’s another side, too — the handful of prostitutes who Brooks says are taking on straight jobs to fill in the gaps between “dates.”

Women who price themselves at the tipping point, $600 or $700 for a few hours’ work, have “always had a difficult time. They’ve always been in a kind of limbo land, between the true high end and the rest,” she said. “Those girls are definitely feeling the crunch.”

For Stacie, who discounted her hourly rate by $100 or more, lowering costs also comes with increasing risks. She is forced to do more outcall work — going to clients’ rooms rather than the having them come to her hotel room, which makes her feel more vulnerable. She also agrees to a wider range of sex acts, which puts her at additional health risk.

“I can’t do this for too many years longer,” she said, “just until I save up enough.

“You always want to be safe, but you’re always lowering your standards.”

In the past, Stacie saved $1,000 a week — on top of the $5,000 she made and spent. Now she’s down to $3,000 and she’s not setting aside any money. Still, that’s an incredibly high salary for most people, which puts the working girls’ woes into context for others struggling with the bad economy.

Stacie and Rebecca, despite the difference in what they charge, are still part of what academics classify as the “indoor” sex trade — the vast majority of the illicit industry, though it’s largely invisible.

“Outdoor” sex workers, the stereotypical streetwalkers, are only 15 percent of the prostitution world, though they represent 85 to 90 percent of the vice arrests, according to a study by Venkatesh and “Freakonomics” author Steven Levitt, who found that street prostitutes in Chicago earn roughly $25 to $30 an hour.

How street prostitutes are faring in Las Vegas is unclear — even women with close ties to the industry, like Rebecca or Lopez, are so far removed from these prostitutes that they don’t know. None contacted by the Sun would agree to talk.

Women who work for escort services also face a strain that independents such as Stacie and Rebecca do not. The escort service charges a base fee of several hundred dollars, and it’s up to the escort to negotiate with the client on top of that — a tip determined upfront. One local escort, reflecting on the economy, said she knew things were getting bad when women who once would walk out of a room for anything less than a $1,500 tip were now hanging around for only a few hundred dollars.

But here’s the irony: When the economy is stable, women who charge midrange fees often end up making more money than call girls serving the high-end clientele, Lopez said. High-end call girl Rebecca makes $15,000 in an average month, but when times are good, Stacie, who charges midrange fees, can clear $25,000 — she just has to hustle much harder for it. It’s a trade-off that plays money against mental health and safety.

If the bad economy does anything to escorting, author Brooks figures, it will be this: Prostitutes will become better at marketing themselves.

“They going to be looking into Web sites, looking into blogging, getting a little more savvy about their marketing,” she said. “And the smart ones will compete for clients in a way that doesn’t impact the girls, not by lowering their prices and by giving more than they feel comfortable with, but by increasing their market savvy.”

One of those is Amber, a New York-based escort available for travel anywhere. She has been flown to Vegas a few times this year, by men who cover her expenses and pay about $5,000 on top of that.

“Vegas is very competitive, and you really feel it,” she said. “I’ve had to be a little more creative, a little more aggressive in my marketing.”

Even then, she added, “I travel the world, but I’m not living as lavishly as I was.”