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Notes -
You cannot conclude this just based on the fact that they are making less money that they could in a normal job -- unless, that is, "rational economic decision" is equated with "making the most money possible", preferences be damned.
Here's the thing: many people will simply find a job of dealing drugs to be more preferable than, say, cutting chicken all day long. I mean, think about what a typical drug dealer is actually doing when he's performing his job. If he's a street dealer, he just hangs out at a street corner all day long, shooting shit with his friends passing by, watching youtube on his phone when bored etc. If he deals out of his home, that's even better: you just hang out at your home, can play XBox all day long, you just have to answer the door every now and then. If you're delivering, it's basically same as dealing out of home, but answering calls just takes longer. In any case, either of the above is way more preferable than having your hands elbow deep in animal guts eight hours a day, or hustling in McD kitchen. Think about it: assume that legal risk is negligible. Would you prefer to serve an occasional customer from out of your home for $7/hour, or stock shelves for $8?
Now, I assume that the studies finding that drug-dealing income is often below minimum wage actually do it after taxes and transfers: note that you don't have to pay Social Security on income made from drug dealing, and it's easier to qualify for and get higher payouts from SNAP/TANF/SSI etc if your over-the-counter income is zero. This is minimum level of competency I'd expect from researchers in academia. Now that I think of, however, I am reminded of the fact that the entire notion of growing income inequality in US in recent decades is entirely false, built upon foundation of ignoring taxes and transfers, which tremendously reduce actual consumption inequality. If they can fail (or, less charitably, lie) at something so basic, they can also be similarly full of shit here as well.
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