Drag queen "Ray" was enraged when a late-night customer on Toronto's downtown track offered him $5 for oral sex recently.

"I didn't spend two hours getting my makeup on and all dressed up for that," says the 36-year-old former hairdresser from Venezuela, who usually charges $60 for the service.

These days, Ray is getting little more than callouses from standing all night near Jarvis and Wellesley, as the economic slump delivers an unexpected hit to the sex trade.

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."

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.

But it's no surprise prostitutes and their customers end up haggling, says Sadorsky. Unlike alcohol and cigarettes, which are regulated and sold in stores, the price of sex is flexible and negotiated for each transaction by the buyer and the seller. People willing to work for less affect the going price, he 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.

And it's not just street prostitutes who are being hit. 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.

As well, she says, the clients they do have are scrimping.

"If they had previously paid for an hour, they are now going for half an hour. Or they are having only three sessions a month, not four."

Toronto's sex trade workers began feeling the pinch of the economic meltdown last fall.

"That's been the vibe on the street since October," says Scott. "How we are doing is a reliable indicator of how the economy is doing."

Wendy Babcock, 29, a harm-reduction worker with Street Health, says the weekly prostitute drop-in she runs has been dominated by concerns about dropping prices.

She has noticed escorts dropping their prices dramatically in their advertisements on the back pages of local free newspapers.

An hour and a half in the prostitute's home with the client's choice of services "used to be $250, and now they are asking for $60 or $80," she says.

"It's not a lucrative career."

She's concerned that sex workers will put themselves in dangerous situations and "have to take more risks" to make ends meet.

Indeed, Carol, 32, says she is getting more requests for dangerous or unusual acts – such as men wanting to be choked, which she will only play-act – prompted by clients' exposure to Internet porn.

Aleesha, a transgendered prostitute who has worked the streets for four years, says she used to earn $400 a night. But now, if she gets $150, "I know that's it."

Staff Sgt. Mike Ervick, head of vice for 52 Division on Dundas St. W. near the Art Gallery of Ontario, says street prostitutes are getting competition from sex workers who've moved indoors to hotels and are using the Internet "in real time" to drum up customers.

"They say, 'The girls are here right now, come quick,' " says Ervick.

Staff Sgt. Ed Roseto of 14 Division, which includes Parkdale, says the undercover officers involved in two sweeps there this winter did find clients "lowballing" prices, even though, after being arrested, they were found to have enough money on them for full price.

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The Parkdale area has always had cheap prostitutes, he says, with females getting $20 for oral sex and male prostitutes getting $40. Men command higher prices, he says, and get double the amount, about $80, for intercourse.

Drugs such as crack play a role in the lives of many prostitutes in the area, he says. "Crack is the biggest pimp in 14 Division."

Inez Garwood, executive director of Streetlight Support Services, which is dedicated to helping prostitutes leave the sex trade, says numerous new "tracks" have blossomed around the city, which means more johns.

The downtown areas of Jarvis and Wellesley, along with Kingston Rd. and Parkdale, were once the main areas of street prostitution in Toronto, but Garwood reports that the men arrested in police sweeps are now found all over the city, including Browns Line, Danforth Ave., Weston Rd., Eglinton Ave. W. and Steeles Ave.

"As long as some guy is standing on a street corner waving $20, we can't stop the prostitution," she says.

Streetlight, which offers two court-mandated diversion programs, one for prostitutes and another for johns, runs a drop-in centre and a food bank.

Ann, who works on the Danforth, has found herself using the food bank this year, after 10 years of working the streets, because her regulars have been hiring her less and less due to the recession.

"Five years ago, I was making $500 to $600 a night," she says.

"It was good money. But everybody's feeling the recession. Regulars I used to see once or twice a week, I don't see them as often. One regular I haven't seen in six months. He's laid off."

As for the lowball offer, she says: "I don't do anything for $20. I wish they printed $40 bills because all I see these days are twenties."

But the high-school dropout says that as difficult and dangerous as it is to survive as a street prostitute, she isn't looking for work elsewhere.

"I still make more than if I was working at McDonald's."