One of the society’s aims was to bring together scholars from various fields who might not otherwise have occasion to meet. Venkatesh soon encountered another anomalous young Fellow, one who also failed the society stereotype. This one happened to be an economist who, instead of thinking grand macro thoughts, favored his own list of offbeat micro curiosities. At the very top of his list was crime. And so, within ten minutes of their meeting, Sudhir Venkatesh told Steven Levitt about the spiral notebooks from Chicago and they decided to collaborate on a paper. It would be the first time that such priceless financial data had fallen into an economist’s hands, affording an analysis of a heretofore uncharted criminal enterprise.
So how did the gang work? An awful lot like most American businesses, actually, though perhaps none more so than McDonald’s. In fact, if you were to hold a McDonald’s organizational chart and a Black Disciples org chart side by side, you could hardly tell the difference.
The gang that Venkatesh had fallen in with was one of about a hundred branches—franchises, really—of a larger Black Disciples organization. J.T., the college-educated leader of his franchise, reported to a central leadership of about twenty men that was called, without irony, the board of directors. (At the same time that white suburbanites were studiously mimicking black rappers’ ghetto culture, black ghetto criminals were studiously mimicking the suburbanites’ dads’ corp-think.) J.T. paid the board of directors nearly 20 percent of his revenues for the right to sell crack in a designated twelve-square-block area. The rest of the money was his to distribute as he saw fit.
Three officers reported directly to J.T.: an enforcer (who ensured the gang members’ safety), a treasurer (who watched over the gang’s liquid assets), and a runner (who transported large quantities of drugs and money to and from the supplier). Beneath the officers were the street-level salesmen known as foot soldiers. The goal of a foot soldier was to someday become an officer. J.T. might have had anywhere from twenty-five to seventy-five foot soldiers on his payroll at any given time, depending on the time of year (autumn was the best crack-selling season; summer and Christmastime were slow) and the size of the gang’s territory (which doubled at one point when the Black Disciples engineered a hostile takeover of a rival gang’s turf). At the very bottom of J.T.’s organization were as many as two hundred members known as the rank and file. They were not employees at all. They did, however, pay dues to the gang—some for protection from rival gangs, others for the chance to eventually earn a job as a foot soldier.
The four years recorded in the gang’s notebooks coincided with the peak years of the crack boom, and business was excellent. J.T.’s franchise quadrupled its revenues during this period. In the first year, it took in an average of $18,500 each month; by the final year, it was collecting $68,400 a month. Here’s a look at the monthly revenues in the third year:
Drug sales: $24,800
Dues: $5,100
Extortionary taxes: $2,100
Total monthly revenues: $32,000
“Drug sales” represents only the money from dealing crack cocaine. The gang did allow some rank-and-file members to sell heroin on its turf but accepted a fixed licensing fee in lieu of a share of profits. (This was off-the-books money and went straight into J.T.’s pocket; he probably skimmed from other sources as well.) The $5,100 in dues came from rank-and-file members only, since full gang members didn’t pay dues. The extortionary taxes were paid by other businesses that operated on the gang’s turf, including grocery stores, gypsy cabs, pimps, and people selling stolen goods or repairing cars on the street.
Now, here’s what it cost J.T., excluding wages, to bring in that $32,000 per month:
Wholesale cost of drugs: $ 5,000
Board of directors fee: $5,000
Mercenary fighters: $1,300
Weapons: $300
Miscellaneous: $2,400
Total monthly nonwage costs: $14,000
Mercenary fighters were nonmembers hired on short-term contracts to help the gang fight turf wars. The cost of weapons is small here because the Black Disciples had a side deal with local gunrunners, helping them navigate the neighborhood in exchange for free or steeply discounted guns. The miscellaneous expenses include legal fees, parties, bribes, and gang-sponsored “community events.” (The Black Disciples worked hard to be seen as a pillar rather than a scourge of the housing-project community.) The miscellaneous expenses also include the costs associated with a gang member’s murder. The gang not only paid for the funeral but often gave a stipend of up to three years’ wages to the victim’s family. Venkatesh had once asked why the gang was so generous in this regard. “That’s a fucking stupid question,” he was told, “ ’cause as long as you been with us, you still don’t understand that their families is our families. We can’t just leave ’em out. We been knowing these folks our whole lives, man, so we grieve when they grieve. You got to respect the family.” There was another reason for the death benefits: the gang feared community backlash (its enterprise was plainly a destructive one) and figured it could buy some goodwill for a few hundred dollars here and there.
The rest of the money the gang took in went to its members, starting with J.T. Here is the single line item in the gang’s budget that made J.T. the happiest:
Net monthly profit accruing to leader: $8,500
At $8,500 per month, J.T.’s annual salary was about $100,000—tax-free, of course, and not including the various off-the-books money he pocketed. This was a lot more than he earned at his short-lived office job in the Loop. And J.T. was just one of roughly 100 leaders at this level within the Black Disciples network. So there were indeed some drug dealers who could afford to live large, or—in the case of the gang’s board of directors—extremely large. Each of those top 20 bosses stood to earn about $500,000 a year. (A third of them, however, were typically imprisoned at any time, a significant downside of an up position in an illicit industry.)
So the top 120 men on the Black Disciples’ pyramid were paid very well. But the pyramid they sat atop was gigantic. Using J.T.’s franchise as a yardstick—3 officers and roughly 50 foot soldiers—there were some 5,300 other men working for those 120 bosses. Then there were another 20,000 unpaid rank-and-file members, many of whom wanted nothing more than an opportunity to become a foot soldier. They were even willing to pay gang dues to have their chance.
And how well did that dream job pay? Here are the monthly totals for the wages that J.T. paid his gang members:
Combined wages paid to all three officers: $2,100
Combined wages paid to all foot soldiers: $7,400
Total monthly gang wages (excluding leader): $9,500
So J.T. paid his employees $9,500, a combined monthly salary that was only $1,000 more than his own official salary. J.T.’s hourly wage was $66. His three officers, meanwhile, each took home $700 a month, which works out to about $7 an hour. And the foot soldiers earned just $3.30 an hour, less than the minimum wage. So the answer to the original question—if drug dealers make so much money, why are they still living with their mothers?—is that, except for the top cats, they don’t make much money. They had no choice but to live with their mothers. For every big earner, there were hundreds more just scraping along. The top 120 men in the Black Disciples gang represented just 2.2 percent of the full-fledged gang membership but took home well more than half the money.