The Economist article Pharaonic creations covers the growing multi-level marketing industry and the various legal battles around whether or not they are illegal pyramid schemes.
For those not familiar with the term "multi-level marketing", think Herbalife, Amway, Avon and other firms that sell products to independent distributors and reward them for finding further recruits. It's online form is often referred to as "social commerce".
Whatever you call it, it's a big industry.
According to the Direct Selling Association (DSA), the industry's trade group, in 2014 these firms generated $34 billion in U.S. sales and 18 million Americans work with multi-level marketing firms as independent contractors. This is up from 15.6 million in 2011.
The vast majority of these people work part-time and/or make modest amounts of money. Key quote on what these folks earn from the Economist article:
Just 12% of these earned more than $25,000 in 2014 and 62% earned less than $6,000. That does not account for expenses, such as purchases of the companies’ products.
Why do people do this type of work? The key reasons, summarized in the DSA infographic below, are to supplement their income and the flexibility it provides.
Alert readers will notice these reasons are very similar to the reasons give for working in the on-demand economy.
There's clearly a growing need for flexible ways to supplement incomes.
Growing economic uncertainty is a key driver behind this growth. See our economic uncertainty section for more details.
We'll have more on this topic in the coming months.