The authors discuss the inception of corporatization among street gangs in American cities. Corporatization is used to mean a dramatic transformation that the street gangs in the US have undergone in the last few decades. For example, in the 1980s, when crack cocaine became readily available, street gangs became the main personnel through which the drug was distributed from one person to the other. The economic benefits that these groups got from dealing in drugs were greatest than the profits these groups got from performing any other illegal drug. Gradually, street gangs were incorporated in distributing different illicit drugs such as heroin and crack cocaine.
The involvement of street gangs in activities associated with economic benefits results from their alienation from all activities that can bring in income. The gang members are more likely to return to crime when indulged in the selling of drugs than when engaged in any other illegal activity (Levitt & Venkatesh, 2001). This happens due to the high incomes that these street gangs derive from the sale of drugs. For example, the mean annual income of selling illegal drugs is 20, 000 to 30, 000 dollars. As opposed to the self-reports, ethnographic studies indicate that street gangs get lower economic benefits from the sale of narcotics.
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The differences between the findings of the self-report and ethnographic studies result from the sample populations that were involved during the study. For example, the self-report studies concentrate on independent drug dealers who are not attached to any gangs. On the other hand, ethnographic studies are concerned about the involvement of gang members in the use of drugs (Levitt & Venkatesh, 2001). These are low-level members of the drug selling hierarchy. Findings indicate that independent drug sellers who are not engaged in any gangs have better financial streams than the "foot soldiers" who are at the lower ends of the street gang’s organizational hierarchy.
The study also explores specific financial information regarding the distribution of wages among gang members. Usually, this information is stored by the leader of the group. This information is used as a management strategy to track the gang’s financial information and the behavior exhibited by specific gang members. This information, which is usually updated monthly, includes data regarding the costs and revenues derived from the sale of drugs. Also, this data consists of the modes of distributing profits among gang members in different levels of the hierarchy, price and quantity of drugs sold, number of violent deaths, injuries, and arrests of gang members and interviews and other observations the gang has been involved in.
The authors used this data to assess the extent to which gang members' individual and collective actions result from the need to achieve the maximum profits from the sale of drugs. Regarding the economic returns resulting from drug dealing relative to legitimate activities in the labor market, gangs engage in this business when they can derive the highest economic benefits (Levitt & Venkatesh, 2001). Usually, street gangs get the minimum wage from the sale of drugs. Earning among the members is highly skewed, with the members higher up in the spectrum making more money than the members within the low levels. As such, most street members are economically motivated to engage in the drug business due to the need to rise higher in the gang hierarchy ranks.
The authors have also evaluated gang wars that are costly in terms of lives lost and the lost amounts of profits. Most of the deaths that drug sellers face are associated with wars from rival gangs. Gang wars are also associated with reduced sales as customers run away from warring groups. Gang wars are related to adverse effects on the demand for drugs. Specifically, gang wars cause a 20 to 30 reduction in the price and quantity of drugs sold. While gang wars are costly in dispute resolution, they are the only route to solving disagreements since there are no legal means to resolving disputes. Gang wars are also caused by the need for low-level gang members to develop a "toughness" reputation. This is a costly affair that affects not only individual members but also the collective gang members.
Additionally, the study seeks to assess the social and economic aspects of a gang that operates within an inner-city of an industrialized American city. The area is predominantly inhabited by African Americans. As such, the Blacks represent a large percentage of the gang members. The males are disproportionately affected by the experiences in the labor market than any other group in the US. The unemployment rates among the males in the community stood at 35 in the 1990s. These unemployment rates are 35-36% times higher than the national average (Levitt & Venkatesh, 2001). Over 40 of the males in this society were not in the labor force. The rate of female unemployment in this community is half that of the males. Children experience adverse economic effects such as poverty. Most of these children are raised in single-parent families that are on welfare programs. About half of the adults in the community do not have a high school diploma. Besides, only one in twenty residents hold a degree as compared to one in every five Americans in the national statistics.
The organizational structure of illegal gangs mimics the structure in most organizations. For example, the central leadership includes four to six embers whose role involves devising the long-term strategies in the organization, connecting with various agencies, and developing relationships with suppliers and affiliates in different states. Besides, the central leadership includes twelve members involved in collecting dues, recruiting new members, punishing members, and liaising with the community. Most of these leaders are imprisoned at any time. The next tier involves the local gang leaders comprising of the enforcer, treasurer, and runner.
The foot soldiers occupy the lowest levels of the hierarchy and are engaged in selling drugs in the streets. The rank and file members pay dues to the gang to receive protection, status, and drugs. At any one time, about one-fourth of the males aged between 16 and 22 years in the community act as foot soldiers to the gang (Levitt & Venkatesh, 2001). The gang sells drugs within a specific territory within the major streets, and rival gang members occupy the areas immediately, not under the gang's control. Conflicts, kidnappings, and killings characterize the relationships between the rival gang members.
According to the authors, the gang derives its revenues from the sale of drugs, dues from gang members, and street taxes obtained from other businesses conducting illegal activities such as gypsy-cabs and people who sell stolen goods. The gang’s non-wage costs include weapons, costs of drugs sold, payments to the leaders, payment to mercenaries, funeral costs, and miscellaneous.
The remuneration among gang members is usually determined by an individual's level in the hierarchy. The local leader claims the highest percentage of the drug profits. Leaders retain 4200 to 10, 900 dollars in profits every month which amounts to an annual wage of 50, 000 to 130, 000 dollars. These figures are above the salaries that average individuals earn in the labor market (Levitt & Venkatesh, 2001). The officers receive 1000 dollars monthly which vary between peaceful and warring times. The foot soldiers receive a regular salary based on the number of shifts they worked to distribute drugs. Usually, crack is sold by a team of six foot soldiers, such as a carrier whose role is to deliver drugs, two laborers who package the drugs, and people who looked out for the group.
Entry-level foot soldiers earn 200 dollars each month. Shockingly, foot soldiers perform most of the work, such as selling drugs and running other errands for the gang. The foot soldiers earn meager salaries since they require minimal skills to enter the gang. Besides, there are ready replacements for the foot soldiers who cannot abide by the laws of the gang (Levitt & Venkatesh, 2001). Due to this low compensation, foot soldiers usually live with their families since they cannot afford to pay bills or hold low-paying jobs in the legitimate labor market. The salaries rise dramatically to 470 dollars per month for foot soldiers at the final year of service. This happens since foot soldiers assume most of the responsibility by engaging in hazardous activities. Also, high wages enhance loyalty among the foot soldiers towards the leadership.
The study has also explored the issue of gang war among rival gangs. Gang wars are associated with a decline in the price, quantity, profits, and revenues derived from the sale of drugs. Since the drug trade is unlawful, gangs cannot access legal contracts or property rights. Besides, the illegal nature of the drug trade makes it difficult to advertise the business (Levitt & Venkatesh, 2001). Violence acts as the only tool that gang members can use to solve disputes and compete with rival gangs. Gang wars negatively affect drug sales, which is, in turn, associated with reduced remuneration among gang members at all levels. During conflicts, gangs sell drugs at relatively low prices to maintain their customer base.
The authors also assessed the risks that gang members are exposed to and why they are willing to face these threats. Gangs are exposed to various risks involving injuries, arrests, and deaths. These risks exist at every step of an individual's engagement in the drug trade. The likelihood of death in every gang member ranges between 1 to 2 every month during warring and transition periods. Active gang members have a one in four chance of dying. Also, gang members are exposed to non-fatal injuries (due to shootings, fists, or knives) and arrests (Levitt & Venkatesh, 2001). Besides, gang members experience a 1 in 200 annual rates of homicide. Despite their exposure to these risks, foot soldiers are willing to engage in the drug trade. This occurs since acts of heroism are heavily rewarded by the group leaders. Also, the compensation that foot soldiers get after their group overcomes a rival group increases due to the expansion of the area of operation. Besides, the salaries they get for their engagement in illegal activities exceed the compensation they may get in the legal labor market. This explains why foot soldiers are even willing to lose their lives as they engage in the illegal drug trade.
Four Questions Regarding Each Reading
Why are male African Americans disproportionately represented in gangs in the area of study?
Where do the drug gangs derive their revenues from?
How is the remuneration spread across various levels of gang members in the hierarchy?
Why are foot soldiers willing to accept the risk of arrests, injuries or deaths through the sale of drugs?
Reference
Levitt, S. D. & Venkatesh, S. A. (2001). An economic analysis of a drug-selling gang finances. Quarterly Journal of Economics. 755-789.
