The vices – smoking, drinking, sex – are usually bulletproof during a recession, says economist Perry Sadorsky, who teaches at York University's Schulich School of Business. So if the sex trade is hurting, "we are in the most serious depression since the 1930s. This shows the magnitude of the decline. It is deep and it is problematic."If prices are dropping is it a decrease in demand or an increase in supply or both?
Sex workers say their incomes began plummeting last fall, with johns pleading poverty and haggling over prices, and prostitutes bidding against each other.
"There are 60 people on the street, but they are all sex workers and there's no money for anybody," says Ray, who, like other prostitutes, did not want his real name used. "This economy is causing a lot of misery."
Sadorsky wonders if the economic crisis is forcing more people into sex work, thereby increasing competition on the street. Toronto police, who use a community complaints system to keep track of prostitution, report no increase in complaints, though they suggest this may mean sex workers are trolling in non-residential areas.Econ 101 tells us that a decrease in demand will decrease price and decrease the quantity traded. An increase in supply also decreases price but increases the quantity traded. If both are happening then price will drop but the effect on quantity is indeterminate. The article also says,
...The recession has seen the street price of oral sex, the most common service, plummet from $60 last fall to $20 today. "Full service" involving intercourse has dropped from $150 to $80.
Escort workers, both those with agencies and independents, report a 15 per cent decline in clients, says Valerie Scott, executive director of Sex Professionals of Canada, a volunteer group working toward the decriminalization of sex work.which would suggest that the demand effect is dominating.
(HT: Market Power)