MLMs: Small Business or Snake Oil?

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Sarah [00:00:00] There is this, this narrative, this undercurrent, this promise of building your own business. But legally is an MLM, a small business, Beth? 

Beth [00:00:10] No, legally, you are an independent contractor for the company when you join an MLM. So in a sense, you have your own business. You are an independent contractor with one customer, and that customer is the MLM that you have joined. So you're providing services to that company and they do not have obligations to you as though you're an employee. They don't have to pay you a minimum wage. They don't have to give you paid time off. They don't have to give you other benefits. You have to supply your own equipment and tools and pay your own taxes. And those are the things that make it feel like you're a small business owner. But this is where a lot of the criticism of MLMs come into. 

Sarah [00:00:51] This is Sarah. 

Beth [00:00:52] And Beth. 

Sarah [00:00:53] You're listening to Pantsuit Politics. 

Beth [00:00:55] The home of grace-filled political conversations. 

Sarah [00:01:14] Hello, everyone, welcome to Pantsuit Politics. On today's show, we're going to discuss the unvaccinated and what motivates them. Before we move on to our long-promised conversation on multi-level marketing companies or MLMs as they are commonly known. And outside of politics, we're going to hit on something affecting all of us. Group text etiquette. Now we are in week two of our premium content drive, where we spend some dedicated time in every episode asking you to financially support our show, either on Patreon or Apple podcast subscriptions. And we wanted to say it again. We need you. Now you hear advertising on the show, but it is notoriously volatile. If we had been depending on advertising during COVID, during peak COVID, we would have been in real trouble. Your support is what got us through and gives us the stability to really build and invest in the show. And we also think we have lots to offer on our premium content channels. We've stumbled upon a real winning combination on Thursdays, Beth. We have the good news brief in the morning and then a spicy Nightly Nuance in the evening. And Beth, I did not realize this. People really, really need to hear you cuss it's meeting some sort of deep psychological need. You often cuss, Drop the F-bomb on the Thursday Nightly Nuance. And people freaking love it. 

Beth [00:02:35] I don't really understand why, but I think that what's nice about our membership communities is I do feel freer to be a little bit more open and I think we kind of let our hair down a little bit in those communities and we also do a lot of deep work there. And so it's just a place where sometimes we need to blow off steam, we do. And I appreciate how people receive it. I guess thank you for your enthusiasm for my swearing. 

Sarah [00:03:02] I feel like if we tell people you have to go up to like twenty-five dollars a month in order to hear Beth say the f-word, people would do it, man, they need it, they need it. And it's going to be a good one this Thursday because we're going to talk about Stephanie Grisham's I'll Take Your Question Now. I did a book report on the Nightly Nuance on Monday about it, but you've been reading it as well, and I'm interested to hear your take. 

Beth [00:03:20] I'm pretty sure it's different than yours. That's what I'm sure of. 

Sarah [00:03:23] I think so I think we've established that. 

Beth [00:03:25] We invite you to consider all of this content for the two weeks of our premium drive. You can listen to all of the news briefs and the Nightly Nuance is on Apple Podcasts subscriptions with the two-week free trial. You can listen to all of it at any level on Patreon. We are going to have some new things happening for our members, including a quarterly video event that will be an ask us anything style event, and we are going to kick that off with the costume party for our members on October 28th. It's going to be so much fun. 

Sarah [00:03:56] My costume is sexy. I just put it I'm just gonna say it right now. My costume is real, real sexy. Just in case that motivates anybody.

Beth [00:04:04] Sarah is just pulling, she's just laying it all out this morning. This is how much we need you, though. We really want you to understand that we try to do a great job for our members because our members are the backbone of the show. And if you're on the fence about supporting our work, we wanted to share these words from Julie, who is one of our executive producers. She said I had been searching for something written visual audio that would help me find some balance and understanding politics since the mid 2000s. I really couldn't find anything out there that provided a fair discussion of American politics until I read something about Pantsuit Politics. I decided to download the podcast and, by the way, had never listened to a podcast before. For my first listen, I was impressed. The level of detail, the depth of knowledge and the willingness to be nuanced in the discussions of current topics just blew me away. Additionally, I felt like I was sitting in the living room of my home, talking with two good friends with different points of view. One day, on a road trip with my husband, I said, Excuse me, but it is Tuesday, and the new Pansy Politics episode just dropped. I said this is if I knew anything about podcast production and publication. My husband agreed to listen to the episode with me, and after it finished, he said, You are so passionate about what these women are doing. You should support them. So I did and have increased my level of support from the minimum level to executive producer over the years. I spread the word about the show whenever I can and have used so much of the knowledge I gained from reading their book and different discussions with family and friends. Most importantly, I treasure the perspectives of people whose experiences, age and background are different than mine, and many times hearing the different perspectives has changed my perspective. Thank you for all you do and keep up the good work. And thank you, Julie, for supporting us and to your husband for listening to those episodes when they drop along with you and for sharing your experience. We hope that all of you will consider taking that jump to becoming about ten percent of our audience currently who supports the show, we would love to move that number to something more like 15 percent, so we hope we hope today's your day. 

Sarah [00:05:51] Yeah, I hope we break 4000 on Patreon. That's my like internal goal for myself that I've now just made external on the show, so we hope you'll join us. 

[00:06:05] Before we get started, as we're recording on Monday, we have just learned of the death of Colin Powell. Colin Powell was a historical figure. He was the country's first black national security adviser, the first black chairman of the Joint Chiefs of Staff and the first black Secretary of State. He was instrumental in American foreign policy and military doctrine for several decades, including what is known as the Powell Doctrine. After his tours in Vietnam in a time in the country's history where there were these slow advances and retreats and holds the Powell Doctrine was you get your political support lined up and you go in with a lot of force. Now in lining up political support for the American invasion of Iraq, Colin Powell went before the UN for a 76-minute speech outlining the case for the invasion. He later called that speech painful and a mark on his legacy. But I think and I hope that his overall legacy is what people are looking at today. 

Beth [00:07:11] I remember seeing Colin Powell speak when I was in elementary school and feeling the energy in the room change. It almost felt like everyone settled and listened and wanted to kind of rise to the level of this man who spoke without any notes with a lot of compassion. With a lot of knowledge and interest and this true, just palpable public servant dedication. It was a very formative experience in my life to see him speak, and I have always thought highly of him, even as I have learned more about how complicated his legacy is. And as he spoke more publicly about how complicated his legacy is and in so many respects, he was the voice from the Republican Party that I longed to hear as the Republican Party was changing in ways that I didn't recognize. So I am grateful for all of the things that I learned from from Colin Powell, and I wish his family a lot of peace and comfort. 

Sarah [00:08:16] OK, we're going to move on and talk about a New York Times editorial that sparked your interest and curiosity over the weekend, Beth. My long-time favorite Zeynep Tufekci, wrote an editorial about the unvaccinated and how our assumptions about the unvaccinated and specifically why they choose to remain unvaccinated are so misunderstood, and that there's a real lack of curiosity about what motivates people or what keeps people from getting the vaccine. Not a lot of even scientific study, which I think she was specifically calling out. I love this sentence, she said, "Science's ability to understand our cells and airways cannot save us if we don't also understand our society and how we can be led astray." 

Beth [00:08:59] I loved this editorial because number one, it points out that the unvaccinated are not one thing, it's not capital T, capital U, The Unvaccinated. Lots of different groups have varied reasons for being hesitant or even resistant to vaccines. What I thought was new and worth really digging into was this contradiction about how, yes, Republicans are more likely to tell polling groups that they will not get vaccinated, and voters who tend to be Republican in the most dedicated, reliable ways are over 65. And that group has the highest vaccination rate in our society. And there's a there's a piece of this editorial where she says, clearly, misinformation is not destiny. Why are we not pouring more effort into understanding why older voters who we know vote Republican and consume a lot of Fox News and OANN and other sources that have been, you know, thumbs down on vaccines and masks and authoritarianism from the beginning of the pandemic? Why are we not trying to better understand why those people got vaccinated and the people who are still hesitant are still hesitant? And this coming at the same time as research showing that the vaccine lotteries that several states tried really weren't effective. To me, just provoked great questions about the sociology of the pandemic and what we are trying to learn as we continue to make our way through it. 

Sarah [00:10:31] Yeah, I was thinking what in 2021, among any group of Americans is 95 percent, right? You don't ever get to 95 percent unless it's like, do you like Dolly Parton? You know, like it's just that's such a high number of that particular demographic over 65. And I think she's right. I don't think we are asking enough questions or the right questions about why that is. We touched on this a little bit with our COVID Check-In episode that there's some of this going on and that's apparent with the vaccine mandates, in that they're working and that we thought it was this really loud, belligerent, stubborn not going to budge anti-vax group. And that's not what we're seeing played out with the mandates at United or health systems. It's this tiny percentage that are actually willing to lose their job. And she says, you know, people are not absolutely opposed. It's more like they were just confused and concerned, and we were ignoring their confusion or their concerns and painting this picture about this monolith. When really, as was often the case with human beings, the reasons are really complex. 

Beth [00:11:40] And those reasons have to do with risk calculus just of a different kind. I think it's interesting to consider how many people have been moved to get vaccinated by a vaccine mandate being imposed at their workplace, but we're not moved to get vaccinated by a lottery. That is logical risk assessment when you understand a present downside and you are not persuaded by a very speculative potential upside. And I just want to learn more about all of this. As I said on that COVID Check-in episode, I'm a hard neutral on the methods to get there. And I'm not mad at these 19 states who tried vaccine lotteries at all. This was an unprecedented time. I am for trying things, you know, to try to move us away from increased death, increase hospitalization. So I I applaud these states for trying something different, and I applaud people for doing the work to figure out statistically, did it matter or not? And I just am really interested in seeing more of that research roll out. 

Sarah [00:12:42] I'll tell you the part that took my breath away when I went, Oh, of course, is that there seems to be a real link between people who lack health insurance and remain unvaccinated, and that also speaks to the over 65 set, who are going to have Medicare and have access to regular health care and have a primary care physician which so, so many Americans don't have. And so if you already have mistrust in the health care system, you already have mistrust in the pharmaceutical industry. I mean, I was thinking about in the midst of all this, what are we? What are we living through? We're living through the Sackler bankruptcy, the pursuit of Purdue Pharma. There's like a big TV show right now about the ways in which the pharmaceutical industry deliberately misled people when it came to OxyContin. So, you know, that's not unrelated, right? That you're having these prominent media narratives and not just media narratives, lived narratives among Americans who have well-placed mistrust in these industries and then to roll in and just say, well, this is different. Get over it without access to to the trusted professionals inside that industry that you can talk to because you don't have health insurance, because you don't have a primary care physician. I mean, it all really makes sense to me. 

Beth [00:14:01] It does. And I've seen so many articles throughout the pandemic that have been have said the most persuasive conversation anyone has about getting vaccinated is with their primary care physician. That is the most persuasive conversation anyone who's hesitant is going to have. I also think that the moment you have something like Colin Powell's death due to COVID 19 complications, despite the fact that he was fully vaccinated, it is another reminder that we are talking very differently about vaccines than we have before. That we are in the middle of a process, not its beginning or its conclusion. It is difficult for people to hear, well, you can get the vaccine and still get COVID and maybe even still transmit it and maybe even still have a serious experience of COVID. And you can see how that on the other side becomes maybe I'll pass, then. Maybe I'll pass this time. I continue to believe that the most effective things we can do are be curious about where people are coming from and what they need to hear to kind of get over this hump because I continue to believe that getting a vaccine is the most effective individual step you can take at this point to protect yourself. And so I'm just grateful that Zeynep Tufekci is out there asking these questions in this way and prioritizing curiosity as a value. 

Sarah [00:15:24] The piece of the article that I really want to take away with me is the emphasis on face-saving that the vaccine mandates in many ways gave the unvaccinated a way to save face right away, to say, well, I had my concerns, but now I don't have a choice. And I thought. I think that might be the thing America most needs right now. I mean, hopefully coming out of this pandemic is opportunities for face-saving, and I don't think it is only the unvaccinated who need opportunities to save face. I think a lot of us has spent the last several months being very angry, being very righteous, being very judgmental towards many of our fellow citizens. And I hope there's opportunities for those of us who have felt frustration and rage and disappointment and heartbreak over the behavior of people in our family and our communities, like I hope we all find a way to save face, to say. And maybe this article is the beginning of maybe thinking in a real sociological, empathetic, open-hearted, curious way. How do people get here listening to how do people get here? Well, we'll present some opportunities for us to say, Well, we thought we knew what we were talking about, but we didn't. And I'm sorry and I'm ready to to save some face and say, like, I'm not a bad person. We were just all responding from a very emotional space and a very hard time, and it's time to move forward. 

Beth [00:17:00] Yeah, I was thinking over the weekend about how I'm really tired of the word polarized. Yeah, I think the word polarized masks, the real emotions behind what it describes and it in some relationships means we're just mad at each other. Well, you can work through being mad at each other. Polarized sounds like an end forever state. If we're mad at each other, we can work through that. If we take in different information sources, we can work through that. If we have a different perspective on how to fight COVID 19, we can work through that. I guess I just want to get more specific. It's kind of like I keep telling my children I'm not interested in bored because bored doesn't provide descriptive information about a problem that we can solve. If we'll state specifically what's going on, I'm sure we can solve the problem. And that's how I feel. 

Sarah [00:17:48] Like the fear needles. She talks about that fear of needles we can work through that.  

Beth [00:17:53] We can work through the fear of needles. We can work through confusion over the vaccine's efficacy. There are so many concerns that we can work through if we'll get more specific about them. 

[00:18:02] You know, the other article that I read that folded right into this for me was the AP story about how Japan suddenly has very low transmission rates of COVID 19, and they don't really understand why they had a very slow vaccination rollout. Rates of vaccination have gone up, and they're wondering if that's giving them kind of what they are concerned could be a temporary reprieve. But here you have just a lot of people saying out loud, we're in a better space and we're not sure why. It's a bit of a mystery. And that posture felt really good to me reading it. I mean, it feels scary, right? None of us like ambiguity, especially about things that are supposed to involve hard science, but someone saying out loud, we're in the middle of that science and we don't have an answer yet that feels like a path forward and a path to rebuilding trust. Because I do think the story of a lot of anti-vax efforts, anti-masking is the story of lost trust. And for officials to just say, we don't know. I think that will. I think that's a building block to move back toward greater trust in institutions. 

Sarah [00:19:12] I'm here for anything that builds curiosity and greater trust in our institutions, I can promise you that. Up next, we're going to talk about multi-level marketing companies. Finally, long last. Here we go. 

[00:19:37] Beth, I want to get this out of the way first. There has been a lot of criticism of multilevel marketing companies in the past several years, and a lot of that was natural. Social media allowed MLM companies to surge in ways that they hadn't before. You know, when we were growing up, you were limited by how many parties you could host, how many people you could talk to in person, or even just over the phone. Then all of a sudden we had direct messaging and tagged post, and we were all inundated with offers and parties, online parties and invitations to join people's teams. And you know what? We all got a little tired. I know I certainly did. I had an online presence earlier than most people, and so I was a hot commodity for many of my friends who started out in MLM companies. And so I know we all got tired of it. I know we all got cranky. And so when podcasts like The Dream came along in 2018, we were all primed and ready to pile on and to rightly examine the history of these companies, the problematic practices of these companies, the exploitation found within these companies. And so then you have the Lula Rich documentary about Lula Roe, and it feels like we're really having a cultural conversation and that conversation has shifted to that MLMs are a cancer, and anyone who joins them is being exploited and/ or just dumb, and I don't want to do that here today. I know you don't want to do that here today. MLMs meet a need, and we want to examine that with the curiosity and grace that we just discussed in the previous conversation about the unvaccinated. No one wants to hear two white ladies with advanced degrees assault the choices of women trying to find financial independence, or immigrants looking to build their own businesses, or even people looking to pay down their student debt from their own dang advanced degrees. So that's not what we're going to do today. Easy narratives with obvious villains don't work almost anywhere, and MLMs are no different. 

Beth [00:21:43] So trying to start at the beginning instead of beginning with a conclusion in mind, let's think about what we're actually talking about. Direct sales is a blanket term focused on person-to-person selling, so we're not in retail. We are in that space of I have a product that I want to share with you. This is a 35 billion dollar industry. 20 million people are involved. There are five thousand five hundred new recruits to direct sales every single day. It has become much more aggressive and successful since COVID 19 began because more people are working from home and trying out new ways of being in the world that include a new career path. And a multilevel marketing company, then, or a network marketing company, is a particular type of direct sales. It encourages existing members to bring new salespeople into the business, and the distinguishing feature of multilevel marketing or network marketing companies are these up lines and down lines that you are going to make money off of people who you recruit and bring into the business and the person who recruited you is going to make money off you and everybody that you bring in. Now you hear these terms a lot with the term pyramid scheme. A pyramid scheme is differentiated from direct sales companies because it does not involve profit from the sale of tangible goods. It is truly about moving money around and a lot of the regulation around multi-level marketing companies, and especially the way people are compensated with them within them, is trying to get at whether this is still about an actual product that's being bought and sold, or whether it's just about money being exchanged. 

Sarah [00:23:21] So let's say, in 2021, COVID has caused you to reflect on your life or for any number of reasons, you're looking for more flexibility or more money, and you want to start your own business. What are your options? Well, I mean, you have a new idea and create a new business all on your own. You could buy an existing business. You could buy a franchise. All these options take money. They take relationships with people who have money. I was struck, Beth, our city, sent out a survey for small businesses, and I thought, Well, I'm a small business. I pay taxes to the city of Paducah, I should fill out the survey, and I was struck by how many questions involve loans. Did you take out a loan to start your business? Have you had a loan since COVID? And just how much money it requires to start a business, to buy a business, to open a franchise? And I think that's such a barrier to people. And so if you're looking at your options, joining an MLM is often one of them. 

Beth [00:24:32] And I think that Heather, one of our members, made such a great comment about how at the beginning it looks like joining an MLM has less of that component of access to capital or credit than other businesses. And yet MLM success, like much other business success, depends on you knowing a network of people who have lots of disposable income. And the way that she framed this that I thought was so poignant is, she said, when you are asking your network to support your business, if you are not on the top rung of the socioeconomic ladder, the ask is bigger. It's a bigger deal to ask people in your community who don't have lots of disposable income to support your business than if you know lots of those folks. And so you take so much money to start a business, you can easily spend a million dollars to buy a franchise. And whatever the model is, small businesses have a really high rate of failure. Now, when we use these statistics, we're talking about small businesses, meaning less than 500 employees. That's an awfully big range of what business can look like. But if we take that definition, according to the Chamber of Commerce, there are about thirty point two million small businesses in the United States. That is a 2018 stat. It's probably shifted dramatically because of COVID 19. There are usually about 400000 new small businesses every year. Twenty percent of those don't make it past year one. Roughly half fail by their fifth year, and 40 percent of existing small businesses earn a profit. Half of them break even and the rest lose money. 

Sarah [00:26:11] There is some evidence that franchises have a little bit higher rate of success, especially during the first two years of business. But long term, that advantage does seem to dissipate. In 2016, the median income for self-employed entrepreneurs was $50000 a year. So the success rates from traditional saw small businesses are low. The success rates from MLMs are even lower. 

Beth [00:26:35] When we talk about experience with MLMs. It blew my mind to see this number. One in 13 adults have participated in at least one MLM in their lifetimes, and I guess if I think about the circle of people in my life, that statistic holds pretty true, but it seemed very high to me. Forty-four percent of people who try and MLM drop out after less than a year and 90 percent leave within five years. 

Sarah [00:26:59] So depending on what study you're looking at, an AARP study found that 73 percent of MLM participants either break even or lose money. There are reports that that put that number closer to 99 percent. 14 percent made less than $5000. Six percent made less between five and 10. And three percent made between 10 and 25K, and point zero five percent made $100000 or more. So much smaller percentages than the small business owners. 

[00:27:27] Beyond the AARP study, the Federal Trade Commission did a major study, and their author found that one in 545 people make a net profit and 997 out of 1000 people involved with an MLM lose money. OK, so here's the thing. This is not hidden information anymore. I think that the cultural conversations surrounding MLMs have really pushed this narrative. It is it is rare to make a lot of money inside these organizations, and yet there are still new recruits every day. So there is a need being met here. What do we think is going on? If people are still signing up they either still want to own their own business, or maybe they're gifted at sales and they want a job in sales, and this seems like a job with more control. So what's going on here? Why are people still signing up? 

Beth [00:28:25] I think it's a huge variety of reasons, and we've heard this as we've asked listeners about their experiences with MLMs. Probably the dominant reason that we hear is that we have people who want to work and traditional workplaces are unrealistic for them, there is a lack of flexibility, there's a lack of childcare. There are issues with hierarchy, with harassment. There are education and licensing barriers. Some people just really want to find a job. And it turns out that the best way for them to find a job that actually works within the context of their lives is to purchase it from an MLM company. 

Sarah [00:29:02] We heard from Rebecca and I thought this was such a great comment. She said, "In reality, the MLM claims to give us what we all want as moms because we all know that women are a huge percentage of particular companies' contractor base." Rebecca continued, "We want time, time to be a wife and a mother and still get our social time in with other moms. At 41, I'm always wishing for more time and getting tired of my industry that I get it. We get tired of being told what to do. We get tired of bosses who don't understand and other women who don't have families looking at us and thinking, Well, that was your choice to have a family so you don't get to get ahead. I have literally heard this. We get tired of working for people who won't budge, won't adapt, won't change. I wish that the MLM concept could do all the things it promises. But unless you are truly in the right physical location with the right people around you, it doesn't work." But I think that speaks to the lure of that promise that even, you know, knowing what we know, the promise of being able to be a mom and be a wife and have social time with other women and make money and be a provider. Like that. That promise is so strong. 

Beth [00:30:08] And the promise of owning your own business is so strong and most people cannot afford the massive startup costs associated with almost any type of new business. And so here are MLMs talking to you about creating your own business. We're going to talk in a second about how true that is, but they are promising you that that flexibility, the autonomy, the benefits of how hard do I want to work? That's going to equate to how much money I have, and that is a really strong draw. 

Sarah [00:30:39] You know, when I look back on my own career, I think the other big promise of the MLM is doing it with support. You know, I've always said like, I'm really successful inside a partnership, like my first blog was a partnership. Obviously, this podcast is a partnership. There's something about having someone there, and there's also a really supportive community. There was around mommy blogs. There is around podcasting where there's people we can talk to who can offer us help and advice. And there's this network of support. I think it's the network of support that is so helpful. Like, you know, maybe more people would start small businesses if you had someone coming along the whole time and saying you can do it and saying, this is your dream and believe in yourself, and here are the marketing tips, and here's how to work social media and oh, by the way, we have this tool that already sets up your website for you. And also, here's how to set up a party, and here's how to talk about the product. I mean, if you had that that sort of framework of support and mentoring and information and sales resources and marketing resources is around you to like, you know, start up a boutique or start up a hometown bookstore like, I think a lot of more people would do that. 

Beth [00:31:53] Absolutely. Franchises are very rational business decision for a lot of people. If you have the capital to say, here's someone who has proven the concept, yeah, I'm not going to have to do all the research. I'm not going to be floating out here on my own. I don't have to learn from every mistake. I mean, we have meetings. So here we are, independent podcasters. It's at the end of the day, it's just the two of us that have created this business. The industry changes all the time. We have meetings where we sit and just struggle through what's the right question to be asking right now? So I completely understand wanting to be a business owner in a model that has already been figured out and in a lot of ways. And your decision-making is about execution on that model and having someone limit what decisions you have to make. Yeah. That's so valuable. 

Sarah [00:32:43] And then I think there are people who are just really good at sales. I think there are women that are good at sales that are not welcomed in sort of the traditional fields like, oh, I don't know, car dealerships where there's not flexibility, there's not that time. And there's also just a lot of patriarchy and discrimination. I think this is true for women. I think this is true for people of color that are good at sales and know they're good at sales and there's just this sort of discriminatory aspect based on their identity. Also, there's just a cultural prejudice towards being salesy. You know, somebody was saying that they noticed it even in Pride and Prejudice, one of our extra credit book club subscriptions that there's this long-standing stereotype surrounding people that are merchants or gooder sales or door to door salesmen. That's what one of my great grandfathers did back in the day. And like, if you're good at that and you have that skill and you're already overcoming sort of the cultural stereotypes surrounding it, the cold, the cold call, the hardcore ask, we do we hold these both interestingly, in our society, like in esteem, somebody who can cold call and do it, and we know it's hard and it's a skill. I've often said all I want my children to leave my house with is the ability to cold call. And then also this sort of prejudice towards that same thing. And I think the tradition, if you're good at it and the traditional sales jobs are gendered or discriminatory or limiting because of your life, you know, primary caregiving or financial reasons or whatever MLMs can come in and say, we see that you have the skill and we think it's valuable and we want to reward you for the skill that other people say is sort of embarrassing. 

Beth [00:34:17] And I think a big miss from traditional workplaces is this sense of community and purpose. MLMs, and we'll talk more about this, have a faith element. There are sometimes charitable elements. There are just life-coachy elements that meet a need for peoole. Wellness. Exactly. There are lots of beliefs about the role of parents in our families, and MLMs are speaking into those things that are on workers' minds that a lot of companies don't want to have any kind of conversation about. And the attitude from a traditional company is more know you come and do your work and I pay you, and that's the extent of our relationship. And MLMs are saying, I get that you're a whole person. And do they overreach on that sometimes and manipulate it? Sure. And that's also well documented at this point. I think there's something to learn from the fact that going there is why you have thousands of new recruits every day. 

Sarah [00:35:15] Yeah, I think it's that instead of treating culture like a problem to be solved, it's like the whole kit and caboodle. The culture is the thing. I mean, you definitely see that in the Lula Roe documentary. You see that in so many MLMs that the culture is I mean, it is either Girlboss or it's very religious or it's like, embrace your creative side, which I think a lot of people and a lot of women want to do. You know, I had a family member say to me, I just want to do something creative and help people. And I thought, Wouldn't that be prime pickin' for an MLM, you know, to come in and say, you can be creative, you can go out there and make people's lives better and you can get paid to do it. I mean, that's the promise that is that that is the elixir. And I think that's why it remains so powerful. 

Beth [00:35:57] And there are people who want, as we talked about, freedom without complete freedom. They want to have colleagues, they want to have structure, they want to have resources, they want some mentoring. We've heard from lots of people who have experience with MLMs that the sales mentoring that they received inside an MLM was far better than they've ever been offered in a traditional setting and spoke to them in a different way than what they've received in the traditional setting. 

Sarah [00:36:24] I also think we should take a minute and say, what do MLMs offer their customers? Because they have lots of customers, depending on the company. You know, Bree reached out and shared her experience as a Lula Roe customer, and she said, you know, it was back in 2015. She had her second baby. She moved to a new town, didn't have a lot of friends. And so when her friends on Facebook would go live two to three nights a week, she'd get to just lay in bed with her baby and hang out with her favorite people and crack jokes. And, you know, battle it out over the leggings. And it was fun. And I think when I look back at my own experience with MLMs, I think there's also this aspect of access to expertise like especially with like the skincare or the essential oils. 

Beth [00:37:08] Pampered Chef. 

Sarah [00:37:09] Yes, pampered chef. There's this intimidating factor of like, there's this huge sort of universe of products that I think I should be using that I think may be good for me. I don't know where to start. I don't understand at all. And so when someone comes in and says, Well, I'll teach you all about the skincare that you need and what will help this problem and what will help this problem. Or I'll teach you all about essential oils and how they can, you know, make you relax or whatever. I think that there's that's the allure for me. When I look back at the parties I actually showed up to or the parties I enjoyed was that there was this sense of like, somebody will walk you through the decision fatigue. Like there is an aspect of MLMs, both as the sign-ups and the customers that promise to eliminate some decision fatigue, which is a heck of a draw here in 2021. 

Beth [00:37:54] It is draw. I really enjoyed Mary Kay parties at a certain moment in life, especially with Mary Kay consultants who not only were helping you with that education component, but also saying I'll do your makeup for prom. You know, if you wanna go out for a special night, I'll show you a new combination of eyeshadows that you might not have thought of before. I mean, I really I really enjoyed that, and I don't want to give short shrift to that customer experience. You're right, as we are today, 2021. Sarah, do you buy from MLMs? What's your personal policy? 

Sarah [00:38:26] It is a case-by-case basis, I do not have a hard prohibition against purchasing anything from an MLM. You know, I have purchased everything from makeup and skincare to kitchen gadgets to kids books to and some of them I still have and some of them I still like. And, you know, just depending on the friend and whether it's there. I am more comfortable when a friend is like, I just like this product, I'm going to do it a little bit on the side than I am where it feels like there's a lot, there's a lot riding on it. I've had some family members in the past and it just felt like there was a lot riding on it, and that's a much more uncomfortable place to be. But I don't have, you know, a prohibition. I'm not going to shred personal relationships because I'm so opposed to MLMs, although I am pretty opposed. So what about you? 

Beth [00:39:15] Well, we often talk about your enneagram type. I am a two on the enneagram, which means I am the dream customer for someone who is in this line of work. Because if you say to me, I just want you to help support my business, I'm, you know, as a two on the enneagram, I'm always looking for people to love me more and to feel useful to people. And so I am. I am there. What do you need me to buy? I will buy it. I will become a long-term customer if it will help you, whether I like the product or not. These are not particularly desirable traits that I have, but they are. They are a part of who I am. 

[00:39:46] So yes, I will buy from people because especially over the past couple of years, I do think the information is out there. I assume people who are doing this know what they are doing and know what they've gotten into you. I am never going to sit down with someone and say, "Are you sure about this?" I also am rarely approached. I think I give off a strong vibe that I definitely am not going to be the next independent sales consultant. And so I don't have that problem of people trying to recruit me and the couple of times that's happened, I am very comfortable saying not for me. I am very focused on my own work, but good for you and I support you and all the best. 

Sarah [00:40:28] So as we've talked about, there is this narrative, this undercurrent, this promise of building your own business. But legally is an MLM, a small business, Beth?

Beth [00:40:40] No, legally, you are an independent contractor for the company when you join an MLM. So in a sense, you have your own business. You are an independent contractor with one customer, and that customer is the MLM that you have joined. So you're providing services to that company and they do not have obligations to you as though you're an employee. They don't have to pay you a minimum wage. They don't have to give you paid time off. They don't have to give you other benefits. You have to supply your own equipment and tools and pay your own taxes. And those are the things that make it feel like you're a small business owner. But this is where a lot of the criticism of MLMs come into. 100 percent of commissions you earn are going to be reported on a 10 99 and you're subject to self-employment tax in addition to regular income tax on those earnings. And the Small Business Administration does not look at you as a business owner. If you are part of an MLM, you're not going to qualify for those SBA loans or other funding and assistance programs. 

Sarah [00:41:36] And look, we've been talking about MLMs from a very business, financial, economic lens, but the reality is that so many of these companies are swept up in our culture and our politics, in our religion and race, and much bigger factors than sort of this back of the napkin math of how much are you investing and how much you're going to get out. There's way more going on here, which is another reason that we're in this spot where we think, well, people know this, why are they still signing up? 

Beth [00:42:13] I think it's important to say that the promise of an MLM is a promise that very neatly squares with a pretty conservative vision for white middle-class moms. This idea that we want you to stay at home and you're entitled to stay at home, we want you to have a business with your friends and have fun and make some money. But it probably doesn't have to be all the money. You definitely don't need health insurance from doing this work. Those are very conservative, white middle-class ideas, and you can see that reflected in who profits from MLMs and what they do with those profits. 

[00:42:54] MLM lobbying is a very big part of conservative world. You see this in Betsy DeVos' family. She was the secretary of Education under the Trump administration. Her family has all kinds of Amway money, and that money has flowed for years in Michigan, in particular to politicians and the RNC and the Heritage Foundation and other conservative think tanks. You see people from Ronald Reagan to Newt Gingrich to Rick Santorum showing up and speaking at Amway events. Trump himself was a spokesperson for one MLM, and he licensed the name Trump network to another one. And lots of Trump world figures, including Ben Carson, have MLM connections. You see lots of MLM money flowing to state attorney general candidates because the state attorney generals are in a position to investigate deceptive trade practices or other issues with MLMs. And so massive donations tend to flow to Republican AG candidates, especially in states like Utah, where MLMs proliferate. 

Sarah [00:43:57] Well, because you have this, pull yourself up by your bootstraps rhetoric, this very individualistic outlook on the world and also lots of religious culture, you know. 31. The Bad Company is named after Proverbs 31, wife of noble character. Again, just like you said, the Church of Latter Day Saints dominates inside this industry. You have so many companies, including Lula Roe, that were founded and run by Mormon families. You have this sort of prosperity gospel. You know, the God will reward you for your hard work, and he will specifically reward you with money. That's just it's these really, really deep threads woven into so many pieces of these individual companies and the industry overall. 

Beth [00:44:48] I was reading an opinion piece from an LDS church member who was talking about why. Why does our church in particular seem to be so invested and MLMs? And she was being very critical of of her own faith and of these companies in making these ties and she said, I know this sounds kind of crass, but that structure of money always flowing up on the chain is very similar to tithing. Some of the things that could seem like red flags fit pretty neatly into some of what we do here, and that's true and in many faith communities. And so I thought that that was a really good way to kind of step back to say what's going on here? And where are we comfortable with that happening? And where are we not comfortable with it happening? Because that's another piece of this whole discussion that I haven't wanted to lose sight of. You know, you mentioned that we sort of have weird feelings culturally about sales. 

Sarah [00:45:46] Mm hmm. 

Beth [00:45:47] We have weird feelings culturally about MLMs in that people are relying on their personal networks. But every professional relies on their personal networks. You are always being asked, Do you need a financial adviser, a real estate agent, a lawyer, an accountant? Professions that we hold in very high esteem also depend on this idea of I cultivate a professional network and that is the source of customers and referrals to customers. There's something inherently wrong with that. And so I keep trying to push myself if I'm going to be super critical of this industry, what are the differentiating factors in this industry? And I think that kind of gets to the what should be next questions for MLMs. 

Sarah [00:46:32] Because MLMs are a 34.5 Billion dollar industry. That's what they usually make in annual sales. So I think the easiest question to start with is maybe not whether they exist, they do exist, you know, sort of how I feel like when people are like, well, I don't believe in them. Well, it's not the it's not the tooth fairy. They do exist. Now you might not agree with them. So let's start breaking that down. Should there be maybe more heavy regulation at the state or federal level when it comes to MLMs? The Federal Trade Commission says MLMs have to pay compensation based on actual sales to real customers. There's this sort of 70 percent rule that's considered the golden rule set by Amway after a big lawsuit in the 1970s that says MLM distributors must sell at least 70 percent of the total amount of products he or she is bought during a given month. But that's more of an industry-standard, not necessarily a regulation. 

Beth [00:47:25] Yeah, the FTC takes a very holistic approach to figuring out when have we left multilevel marketing and gone into a pyramid scheme territory, so they think about what are your marketing representations? What kind of experiences are people having with you as participants? What are the incentives of the compensation structure? And that personal consumption purchasing is a very tricky issue. That is where people try to get me in as a participant in MLMs. They recruit me so that I can get the discount on the products that I like. Yeah, right. And that's a really hard issue to regulate because in some senses we got lots of companies out there. I have a Costco card. There are lots of places where you pay something to be able to purchase at a discount. So when is that crossing a line? And so much of who even gets looked at by the FTC depends on what complaints have come in and what resources the FTC has available, because it is a very fact-intensive, expensive oversight process. 

Sarah [00:48:30] The last major FTC enforcement action on MLMs happened during the Obama administration. The administration fined Herbalife $200 million and required that it restructure its business, and the FTC has put Herbalife under a monitor for seven years. So we have some federal regulation and like you said, you also have state regulation. We all learned about the Washington state lawsuit against Lula Roe during the documentary, so driven by the state attorney generals, as you said, which are often heavily lobbied by the industry itself. 

[00:49:00] I would like to see more regulation. I think that we have enough evidence at this point in time and enough statistics and numbers about the number of people getting in and being hurt by these companies. When I'm looking at the cost-benefit analysis, I think it is worth being aggressive to protect people being exploited by MLMs at the risk that some people might lose their discount. You know what I'm saying? Like, I'm just not that concerned about that. If there's this massive amount of people out there who sign MLM to get their discount while y'all can, y'all can figure that out along with the rest of businesses because it to me, as feels like the risk is really with the people being recruited and exploited. And I'd rather lean more in preventing that and be less concerned that there might be some people out there joining for the discount. 

Beth [00:49:51] I think there are many parallels to the conversation we were just having about cigarettes and social media the other day. I want more transparent labeling. I was reading about how most MLMs do pretty serious intensive disclosure statements to try to stay out of trouble with the FTC. And there have been some surveys done among participants in those MLMs about how accurate they think those disclosure statements are, how transparent they are. I think that's a fruitful place to look for perhaps new regulation, new legislation, new oversight, just really letting people know here's the percentage of people who actually make money. Here's what that money looks like. Because look, a lot of people I know who've done this are not looking to make $100000 a year from it. They are looking to make $200 a month. And if that's what they're going for and they have a realistic understanding of the percentage likelihood and what it will take to get there and what that works out to per hour, you know, of their time that they invest to make it. And they and that's the path they choose far, be it for me to say, don't choose that path. But I think transparency and disclosure is where this conversation needs to go. 

Sarah [00:51:01] Well, and I just have concerns about the conversation, less about the regulation. I think you're exactly right about where the regulation needs to go. The conversation is really turning. You know, you have Tik Toks, Reddits, whole YouTube channels that are anti-MLM and dedicated to sort of critiquing them. And where we started this conversation with social media that was really a fuel for MLM. Well, now it's sort of it's a weakness, right where they needed these influencers. Now they have. And social media provides such a platform will now social media is providing the platform for the critique, and I think it's a fair critique. What I don't want it to turn into is honestly a lot of what we talked about with our conversation around the vaccinated, where one side is smart and one side is dumb and one side sees the truth and the other side is just ignorant to what's happening to them. I think that's a really harmful narrative in this country, and it plays to all sorts of trends that are tearing us apart from sort of educational polarization to social media conversations.

Beth [00:52:04] Anit-religious and religious sentiment. 

Sarah [00:52:06] Yes. 

Beth [00:52:07] And getting entrenched against eash other. 

Sarah [00:52:08] We're all, yeah, like all these different things and I, I don't want that to feed that. I think it just like the previous conversation, we need to remain curious instead of just falling into this easy narrative where the smart people understand how terrible MLMs are and everybody else is just either exploited or dumb. I want us to keep curiosity to say, yeah, it is exploitive, but it's meeting a need. What need is it meeting? Sort of what we've tried to do here. I think there's, you know, we covered very little in a short amount of time. There's a lot more conversation to be had instead of just look how terrible these companies are, but to really to really examine with grace and curiosity and empathy the needs they are meeting and why they have found such success. And you know, honestly, where there could be more societal structure to support people so that they're not in need of these particular situations. I mean, I think that's a huge part of it, too. We need more child care. We need better health care. We need better social support for people so that they're not falling prey to some of the most exploitative of these companies. And where there are companies that are rewarded that they want to get involved in that they can do that with that transparent information and full consent. 

Beth [00:53:30] Another piece I want to be sure to say before we wrap up, because you're right, we have only scratched the surface of a very complex topic is that I don't think these companies are all one thing. I think there are huge differentiators between different types of MLMs. We are not investigative, consumer reporting kind of journalists who can piece out for you this is a great, upstanding company where you have a better opportunity than another one. But I know enough to know that all MLMs are not created equal. 

[00:53:57] The big takeaway for me, Sarah, on that list of what should we be learning here is exactly what you said about your cousin that so many people just want to be creative and help in their work. And I think that our traditional conception of work is not meeting that need. I think the more technology changes how we work, the more pressing that question is going to get. I think COVID has accelerated how pressing that question is. And so the answer to me is not for us to either champion or disparage all of a certain type of business, but to just be asking how do we get that need met in as many places as possible? Because our labor issues are real right now and significant and not going anywhere. And there is, I think, quite a bit to be learned. When you look at where MLMs have had some success in meeting those needs that might help us find our way out of those labor shortages. 

Sarah [00:55:03] Our ongoing conversation about work is one of my most favorite. I look forward to continuing it beyond our conversation about multilevel marketing, although I'm sure we will have more conversations about that. We look forward, as always, to hearing from you on these topics. Up next, we're going to talk about what's on our minds outside politics.

Sarah [00:55:28] Beth, what's on your mind outside politics? 

Beth [00:55:30] Just been thinking a lot about group texts because they have become extremely important to me, especially during the early days of the pandemic, but even beyond. I find that the best way that I stay in touch with friends who are my age and in my state of life are group texts. It also becomes clear to me that people have different feelings about what the etiquette is in group texting. So I just wanted to get your thoughts, Sarah, about mediums. Do you prefer Marco Polo or Voxer or actual text messages? Do we do we like each other's messages? Do we heart? I mean, I just think there are a lot of things to explore here. 

Sarah [00:56:06] I'm in a different place. I was there at one point I there was a point in my life where I felt like group texts are the the most amazing invention for social life and friendships. I don't feel that way anymore. I'm kind of over them if I'm being really honest. I'm certainly over the responses. Now it's gotten better because I don't have any notifications on for my text messages and I don't wear an Apple Watch, so I'm not bombarded when people are like ap-, like liking and responding, and that's helped a lot. I enjoy them more now that I can just pick them up and catch the last 15 interactions as opposed to catching them one at a time as they come in. And I do wish we could eliminate the reactions because it does feel like it dramatically increases the burden of a group text. I love Marco Polo for my girlfriends. That's one of my favorite ways to interact with my friends. But I do. You know, it's not that I'm opposed to texting. I'm just like feel myself, slowly falling out of love with it. I do love to send a Tik Tok. That's my new favorite way to interact over text messages with my friends and family is to send my favorite Tik Tok to them. So maybe I've just clearly transferred one addiction to another one. But I will tell you this, despite all my complicated feelings towards group text, I cannot wait until I have a group text with all my kids. I am like, so excited for the day when me and we already have meet Nicholas and Griffin, although he's just has a phone over Wi-Fi fi. But like, I'm just so excited for that day when we have Kristen Howerton posting one the other day, a screenshot of like her group text with her kids. It wasn't even that like funny or interesting. I'm just like, Man, I cannot wait for that. I'm psyched about the The Kid Group text. 

Beth [00:57:50] Well, I enjoy it because I like asymmetric forms of communication. I hate phone calls. I really hate getting on a zoom. I would much rather like I was just on a subcommittee in this process through my church, and we used Marco Polo and I loved it. I loved being able to communicate that way. I love Voxer. I love being able to listen to someone's voice, but also think about it for a second before I respond. I think Voxer has the best reaction capacity because you don't get an alert with the reaction to me. That's a design thing because I like the reactions. I like knowing somebody saw it, but don't they don't feel compelled to respond or whatever. I just don't want the ding ding ding. So I manage my notifications tightly too. And that to me is like the the basic role of group text etiquette that I want in my life. Everybody is responsible for their own notifications. So you text whenever you want to because we're all adults and we're responsible for whether the ringer is on at whatever time of day.  Also you show me the same courtesy by not getting anxious if I haven't responded for a while because we're all adults and life pulls us in different directions, right? Right. And I like to get in on those when I really have a hot second to think about it. That's why I feel really good about the group texts that I have going with my friends and my family because I think everybody starts from that place of just assuming we'll get to this when we get to it. Nothing's on fire. This is a lovely, fun way for us to stay in touch, and we should keep it that way. 

Sarah [00:59:18] Yeah, I mean, all these forms of communication make it so much easier to stay in contact with people that before they existed, I would like miss, but I'm like, Oh, where should I email them or should I call them? Really, it would just be until I saw them again, and that was too long. So I am deeply grateful for the ability to stay in contact, easy contact with so many people in my life that are important to me. 

Beth [00:59:40] And I think it's a good way to get a gut check on how you're reacting to things. You know, I remember Tracy McMillan Cotton re-tweeting just something bananas that a very high profile person had said about, I don't know, a store or something in New York. And her comment with the retweet was just like, You need a group text. That's where you work this stuff out, not on Twitter. And I think that's right like that is the real value of having this kind of medium where you can just say, Is this happening for anybody else? How are you feeling about this? I think it's really healthy. If you can kind of keep in mind, I am not using this as a tool to become resentful towards other people. 

Sarah [01:00:21] Right, right. Well, thank you for joining us for another episode of Pantsuit Politics. Again, we are in our second and final week of our premium content drive. Last night I gave my book report on Stephanie Grisham's book, so you should definitely go check that out. It means so much to us to have members of our community supporting the show and making what we do possible. It truly would not be possible without our subscribers supporting us, that's just I cannot state that any plainly, so if you've been on the fence about joining our premium community, now is the time to do it. The links are in the show notes. We would love to have you either at Apple Podcasts subscriptions or Patreon. You can get a free two-week trial on Apple Podcasts subscriptions, or you can join Patreon at any level and receive all of last week's and this week's content to try it out. We'll be back in your ears on Friday and until then, keep it nuanced y'all. 

Beth [01:01:18] Pantsuit Politics is produced by Studio D Podcast Production.  

Alise Napp is our managing director.

Sarah [01:01:24] Megan Hart and Maggie Penton are our community engagement managers. Dante Lima is the composer and performer of our theme music. 

Beth [01:01:31] Our show is listener-supported. Special thanks to our executive producers 

Executive Producers (Read their own names) [01:01:35] Martha Bronitsky, Linda Daniel, Ali Edwards, Janice Elliot, Sarah Greenup, Julie Haller, Helen Handley, Tiffany Hassler, Barry Kaufman, Molly Kohrs.

The Kriebs, Laurie LaDow, Lilly McClure, David McWilliams, Jared Minson, Emily Neesley, Danny Ozment, The Pentons, Tawni Peterson, Tracy Puthoff, Sarah Ralph, Jeremy Sequoia, Karin True, Amy Whited, Emily Holladay, Katy Stigers, Nick and Alysa Vilelli.

Beth [01:02:08] Ashley Thompson, Melinda Johnston, Joshua Allen, Morgan McHugh, Michelle Wood, Nichole Berklas, Paula Bremer and Tim Miller. 

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