Beyond the Pole: Can Strip Clubs Predict Recessions?
Forget the gross domestic product, this may be a more interesting measure of economic slowdown.
After two pandemic-struck years of “unprecedented times”, resulting in rising interest rates, sky-high inflation, and GDP growth sluggish across the world, experts are looking beyond these metrics and uncovering unorthodox signals of an economic downturn.
A Texas-based graduate student and stripper observed plummeting earnings in May 2022, and stated the other workers at the club picked up a similar pattern in the decrease of earnings, even in December — a usually robust month for consumption, and that her income in December 2022 was down by half relative to her earnings the same time last year.
RCI Hospitality Holdings (NASDAQ: RICK), a listed adult entertainment provider has witnessed fluctuations in net income throughout 2022.
The net profit margin of RICK has seen a slower increase in September 2022, only rising by 1.8% from September 2021; contrasting the dramatic ascension from September 2020’s net profit margin of -4.8% to 15.4% a year later. In addition, the return on equity (ROE) and return on assets (ROA) saw similar trend lines, indicating a slower increase in profitability in the time period. Despite healthier-looking numbers than most, all the figures are echoing the sentiment of the aforementioned Texas-based stripper.
Historically, Page Six published a short article about how Manhattan’s strip clubs all over the city witnessed a drop in business, “with fewer customers, less bar traffic and a drop in lap dances”, on 22 September 2008, seven days before the stock market fell 777.68 points in intraday trading, at the time the biggest point drop. Now, sex workers and all await the impact of inflation slows or whether a recession may still be on the way.
From a consumer perspective, potential clients now spend a proportionally larger amount on the same basket of goods, in the form of rent-hikes, hiked energy prices, food, and gas prices, lowered December bonuses and the since-disappeared unemployment stimulus checks have put pressure on their discretionary incomes. All these are factors contributing to a reduction in income for strippers.
For example, the standard tip is a dollar, and price inflation lowers the real value of that dollar. Customers are unlikely to tip 1.43 into the stripper’s garments. They might do two or three singles, but strippers will be shortchanged at various points going up the price pole.
While I find stripping to be a fascinating study of economics, a lack of data and research is unable to support the statements of the strip club being an economic indicator. There is a lack of data from the industry, as most strippers tend to be independent contractors, high labor turnover and the performance of each individual contractor has not been recorded across several nations in order to provide any conclusive evidence on the price elasticity of demand and supply of the strip club, let alone it’s potential to be an indicator of economic health. However, it does explain the shift in consumer attitudes and that people are all feeling the financial strain.
Similarly, labor economist Sania Khan stated she’s not convinced that these stories are enough to predict a recession. “It’s indicative of how much people have in their pockets. It’s one indicator that kind of correlates with consumer confidence,” says Khan. “One of the things that we’re seeing is that people expect inflation to persist, which makes it almost a self-fulfilling prophecy.”
