MLMs Take the Worst Parts of the Gig Economy, Then Make You Pay

In the wake of the recession, countless Americans — particularly student loan-laden, underemployed millennials — stitched together a livable wage from a patchwork quilt of income streams. From the rot of the Great Recession, the gig economy bloomed, and alongside it, a curious kind of slang creeped into our collective vernacular and lodged itself there firmly. “Side-hustle,” which first entered our language via African-American newspapers in the ’50s, became a slick, hashtaggable shorthand for “working my ass off, often in addition to a full-time job, just so I can make rent and maybe cover my car payment too.”

Because while gig economy platforms tout flexibility and the alluring bait of “be your own boss,” the reality is that millions of workers are gigging because of economic necessity, not out of a burning desire to be their own bosses. In 2016, a study conducted by global consulting firm McKinsey & Company found that 50 million Americans and Europeans are “independent out of necessity, and more than 20 million of them rely on independent work as their primary source of income.”

These days, who wouldn't turn down an opportunity for a little extra income, especially when all it theoretically takes is hitting up your high school pals and former coworkers on Facebook? Enter multilevel marketing, or MLM — the commercial juggernaut that birthed the Hydra's head of pushy sales pitches for patterned leggings, long-wear lipstick, weight-loss wraps, and eyelash extensions that dominate your social feeds. More than 20 million people in the United States are involved as independent sellers in an MLM or direct-sales company. (Quick semantics note: almost all direct selling organizations employ the hierarchical recruitment structure of MLMs, which means that almost all direct-selling organizations are also MLMs. For our purposes here, the terms are used interchangeably.) In 2017, there are more direct-sales organizations than ever before, and an estimated one in six U.S. households is involved in one, according to the Direct Selling Association.

That statistic is staggering, but perhaps not that surprising for anyone who’s had access to a social-media newsfeed in the last year or two. MLMs and their acolytes are ubiquitous, and they're thriving — especially among women, who in 2016 comprised nearly 75 percent of all U.S. direct-sales consultants. Like the Mary Kay ladies of yore, these sellers use their existing relationships to sell product, and to recruit people to join their “downline.” Instead of selling foundation door to door or hosting awkward Tupperware parties in the suburbs, though, MLM reps are now demoing Younique foundation on Facebook Live and proffering leggings and tunic giveaways on Instagram. It’s classic MLM made over for millennials, a demographic that constitutes nearly a third of the people involved with direct sales.

Perhaps most notable? The language now used, both to recruit and to sell, is a little different. No longer is the promise simply extra income: In its place is a rhetoric that reads like a patois of pseudo-empowering marketplace feminism with a tinge of gig economy side hustle-speak. It’s not just about selling lipstick and leggings; it’s about ambition, chasing a dream, emancipating oneself from the chains of one’s cubicle. It’s aspirational.

On consultants’ Instagram feeds, in between the product promo, before-and-afters, flash sales, and giveaways, there will typically be a substantial dosage of #GirlBoss content: lots of “hustle” in gold script; lots of Pinterest-worthy inspirational quotes about taking risks and forging your own path and being the CEO of your life. Posts are often bolstered with many, many hashtags, including but not limited to: #slay, #grateful, #blessed, #MomBoss, #BusinessBae, #AmbitionOnFleek. Memes and blocks of emoji-laced “copypasta” text about supporting entrepreneurs and championing local businesses make the Facebook rounds, over and over again.

It’s a dead ringer for the kind of gig economy recruitment rhetoric that Jia Tolentino called out and deconstructed in the New Yorker earlier this year: “At the root of this is the American obsession with self-reliance, which makes it more acceptable to applaud an individual for working himself to death than to argue that an individual working himself to death is evidence of a flawed economic system,” she writes. “The contrast between the gig economy’s rhetoric (everyone is always connecting, having fun, and killing it!) and the conditions that allow it to exist (a lack of dependable employment that pays a living wage) makes this kink in our thinking especially clear.”

The gig economy gave exploitation of independent contractors a shiny, Instagram-filtered veneer in the name of freedom and “hustle.” It conflates merit and worth with working your fingers to the bone. And promises like Lyft’s or Fiverr’s aren’t new; they’ve been coming out of the mouths of MLM recruiters for decades. With MLMs, though, the recruited inevitably becomes the recruiter, and on down the chain it goes.

Because in MLM, the real money isn’t in selling products: It’s in building your downline. “Participants rarely, if ever, move into the profit column without an aggressive recruitment campaign carried out over a period of time,” writes Jon Taylor, who analyzed earnings data and the compensation plans of 350 MLM companies. (One top seller for Rodan + Fields told Allure in 2015 that 95 percent of her six-figure income is based on the commissions on the sales of people she’s recruited below her over the last six years; actually selling the products themselves is just pocket change.)

For sellers, the motivational posts and “building my empire” sentiments that pop up in between product promo is just as essential an advertising tool as a killer before-and-after photo. Some organizations even train their sellers to create this kind of content: Amber, who sells nail wraps for Jamberry, says the company offers online coaching groups that include sharable motivational memes. Elle, a former Younique seller who detailed her experiences on her blog, writes that she was initially attracted to Younique after seeing an acquaintance’s posts about “rocking” her business, escaping the 9-to-5 life, and witnessing her life change for the better after taking a bold leap of faith into the unknown. “Scarlett looked so cool, so self-assured, so… business-like,” Elle writes. “I wanted that, too.”

Via email, Elle tells me that after experiencing it in her Younique seller’s group (the Butterfly Babes), she now sees this kind of verbiage across MLMs. “It seems to be learned behaviour,” she says. “The downlines see their uplines spouting this inspirational trite; they think their upline is being successful, so they want to emulate them. Thus the behaviour spreads like a disease.” A quick look at the #JoinMyTeam hashtag on Instagram reveals a mosaic of platitudes — “Building my empire one mascara at a time,” “Goal Digger,” “The dream is free, but the hustle is sold separately” — accompanied by captions that promise freedom, flexibility, and success for those who are willing to take the leap. “Do something brave and LET’S DO THIS,” a LipSense distributor writes. “People are going to judge you no matter what you do... might as well be living a lifestyle you LOVE!”

Ultimately, whether they’re promoting eyelash extensions or body wraps, most MLM sellers are making the same sales pitch: Join me. Because they’re not just expected to move product; they’re tasked with selling an opportunity, a lifestyle, a dream.

Amber is keenly aware of the pressure and discomfort inherent in a business that thrives on commodifying relationships and spreading the gospel of #hustle far and wide. "I'm very cautious about damaging my real-life relationships to benefit my Jamberry business, so I don't try to recruit sales or consultants as much as the company would like," she says. "The people I've been exposed to that appear to have success with direct marketing are shameless about promoting them. That's totally gross to me." The recruitment spiral of MLMs is never-ending, and the result is an echo chamber that reverberates illusions of achieving endless opportunity fueled purely by hustle.

Illusions, because statistically, most people who participate in MLMs are destined to fail. In his statistical analysis of MLM profits, Jon Taylor estimates that 99 percent of people involved in MLMs lose money. “MLM makes gambling look like a safe bet in comparison,” he writes.

It takes privilege to pull it off, too. Most MLMs require an upfront buy-in, usually in the form of inventory purchase (which sellers are then on the hook for offloading). Each organization varies in the level of financial commitment it requires of sellers, but this pay-to-play (or pay-to-slay) premise can feel risky at best, predatory at worst. Amber says her Jamberry startup kit cost $100, while the Rodan + Fields’s “getting started” launch kits vary dramatically in price, from the cheapest possible option ($45) to the more popular kits ($395 to $995). Notably, LuLaRoe’s consultants plunk down an average of $5,000 for their starter kit of inventory.

Succeeding at an MLM requires time; startup cash, preferably a safety net in the form of a cushy savings account or another income stream (like a full-time job or an employed spouse); a large and captive audience; and a willingness to constantly, visibly self-promote — and even after all of that #hustle, you're still statistically likely to lose money. Gig-economy jobs are usually built to monetize something you already own; to turn a spare bedroom or a car into a revenue stream. MLMs, on the other hand, commodify not property, but relationships. And if you decide to throw in the towel on that Airbnb or Lyft gig, at least you still own and can use your guest room or your Camry. Piles of unwanted leggings or nail wraps, on the other hand? Not so much.

It takes some significant cash and spare time to become profitable, making it an opportunity mostly fit for those with the luxury of time and the privilege to patiently await profit that sometimes takes months to kick in. And even the most successful of MLM sellers are still classified as independent contractors, operating without the safety net of benefits like healthcare or family leave and exempt from federal labor protections like overtime pay. For someone who doesn’t have access to those resources elsewhere — like, say, a single working mom trying to make ends meet — all those empowering girl-boss platitudes might ring a little hollow.

“The market is saturated, and because of the required upfront cost and slow return on investment, I have a hard time recruiting people,” Amber says. What good is a side hustle if it doesn't help to pay the bills, or if you're spending more on inventory than you make in sales and commissions? That’s not a side hustle; that’s an expensive hobby.

MLMs and the gig economy both capitalize on a deeply American cultural mythos that self-reliance and grit are all it takes to succeed. Yet by neglecting to provide workers with basic protections or a clear, predictable understanding of income, they’re simultaneously complicit in some of the very same drivers of socioeconomic inequality that force people to seek out a side gig in the first place. These companies promise all the luster of creative entrepreneurship — freedom, independence, #BeYourOwnBoss — despite the very real and rigid structures and expectations they have in place for their laborers. It’s capitalism with hashtags and a Snapchat filter, but it's still capitalism, propped up by laborers whose efforts reward the fortunate few who sit at the top of the pyramid.

Update: This article has been updated to reflect the lowest possible buy-in option for Rodan + Fields sellers.