Wednesday, June 4, 2014

Which work "pyramid" should you choose

My wife and I were recently contacted by friends to consider a multi-level marketing company as a way to supplement our household income.  We spent a lovely evening catching up with them as it had been a while since we saw each other, then we dove into the opportunity via a few videos, and some time for questions and answers.  As I am not unfamiliar with multi-level marketing businesses, much of what I witnessed on the videos and heard in my friends' answers were not surprising.  The question of course is, can you make some money with a multi-level marketing business?

In this case, the product is something everyone uses everyday.  It is not a fad item like trampolines,  not an item that someone would only buy once like life insurance, and not a get healthy item that may be replaced with the next popular get healthy item, or just discontinued if the person didn't "get healthy".  From that respect, I was interested in the opportunity.

But, like all multi-level marketing businesses, it is necessary to create a down line.  In other words, in addition to selling the product, you need to recruit other associates to sell the product and you need them to recruit still more associates.  Unless you get three or four levels deep, you will never earn an income worth the effort.  The good news with this particular company is that the number of "sales" one needed to make was minimal, and the number of associates one needed to recruit was less than fingers on your hand.  So, as with some multi-level marketing businesses, the problem of saturation. i.e. running out of friends and family to buy your product, was less of an obstacle.  To me, finding those people who might run with the idea and recruit other associates is the more difficult part.  And, while having one down line that becomes 4,5,6 levels deep would certainly produce some income, creating a 2nd, then 3rd line is where the real money lurks.  That is why so many of these organizations advertise for managers when they recruit because in the end, it is finding, then training a team that is the required skill. 

For my friends' part, they have already experienced some positive results.  Part of their approach includes the fact that they have been involved for over 6 months.  They have reasonable expectations as opposed to those opportunities that promise big bucks.  They have not drawn any lines in the sand as to when they expect big success, which is a bit unlike some of the high pressure tactics you might experience  from some of these opportunities.  Of course, the down side of that approach is that the guys at the top, the people who started the business in the first place, the people you meet at the seminars who have 6 figure incomes and large blocks of leisure time, they are smart enough to know when to get out and find the next big idea in multi-level marketing,  Once that happens, a new management team may be less successful or the company itself may shrivel and die away.

At this point you may be thinking that I do not intend to pursue this opportunity.   That I know the dangers of investing in a work pyramid of this type, know that upwards of 90% of those who jump in do not make a big splash, and know that there is no stability in these schemes.

But then again, how stable is any job today?  What company isn't really a pyramid in which those at the top gain wealth through the work of those below?

My current full time position with the PLCB is under debate in the PA legislature as to whether they will sell the stores for a one time windfall.  Truth be told, anyone who works for a large corporation faces potential job loss whether it be through a buyout/merger with a competitor, outsourcing the work to a more friendly area, (i.e. where labor is cheaper), downsizing the company itself or merely closing one location in favor of another.  As for small companies, upwards of 50% of new companies fail within 5 years.  Clearly, the days of getting hired out of high school or college and staying with one company for life have long since past.

Even a few seconds of research tells us that over the course of our lives we will likely have more than one career and certainly many different jobs.  The Bureau of Labor Statistics (BLS) reports that people born between 1957 and 1964 (that is me) held an average of 11 jobs from ages 18 to 44. On average, men held 11.4 jobs and women held 10.7 jobs.  25% percent held 15 jobs or more, while only 12% held four jobs or less.  In my lifetime I have worked in fast food (twice), as a telemarketer, making candles, making gang mowers, working for a wicker furniture importer, making jewelry, working for a bulk mailing company, working for a firemen's clothing manufacturer, working for a sporting goods wholesaler, working as a sales rep in transportation, and stocking shelves for a supermarket, in addition to my current position managing a wine and spirits store.  I even worked on the 2010 census.

I have spent my life working for companies at various levels of their work pyramids.  Sometimes I was at the very bottom, sometime towards the bottom but with some access to a few levels above me, and sometimes, in the smaller pyramids, in the middle with direct access to the top level.  But in the end, I have never worked my way to the top, never started my own pyramid so that I could be at the top.  And ultimately, that is where the vast majority of workers fall.  We are recruits, sometimes directly via the owner, but mostly we are associates hired by other associates of whatever work pyramid we call our job.  And, like those multi-level marketing organizations, much of our work rewards those above us, whether it be the top tier in a multi-level marketing company, or the CEO of the corporation. 

In the end then, the decision to work for a multi-tier marketing company should be based on the decision to work for any other kind of company.  Is it work that I like doing?  Is it work that will reward me for my efforts?  Is it work that will provide the opportunity for advancement?  Is it just work to provide myself and my family with a bit of breathing space?  If the answer to that last question is yes, I don't see any reason to elevate or disparage one type of work pyramid over another.

Coincidentally, this quarter's Lapham is called Revolution.  So often, it seems, revolutions are connected to work and feeling one's efforts are properly rewarded.  Whether it be land owners who tire of the king's edicts, business owners who tire of a far away governments' taxes or peasants who tire of living in poverty while the ruling class prospers, there have been many instances of revolutions in which the fruits of one's work were fought and died for. 

While I am sure that multi-level marketing opportunities existed in the 50's and 60's, (Avon, Tupperware), I wonder if the proliferation of them has something to do with the decline of the purchasing power of the middle class since 1980.  Is the next work revolution already in progress? 

Some say that the industrial revolution, the mechanization of our manufacturing processes, the assembly line nature of so many of the products we make, leads to job dissatisfaction.  We can't see a connection between what we do and the finished product.  We can't see a connection between our role in the process and the consumer who purchases the product.  We work for the weekend because we get very little satisfaction from the work itself. 

When so many people work 30, 40, 50 hours a week and still struggle to stay afloat, and are miserable in the effort, is it any wonder why a multi-level marketing opportunity, with its chance to be one's own boss, its seminars packed with happy associates, one might say its offer of finally reaching the American dream, is it any wonder why this type of work pyramid can be so attractive?

Perhaps the slow economic recovery will continue and the middle class will somehow gain its footing again either through the realization of those at the top that they can't continue to bogart the pie, or via legislation that will force the private sector to pay livable wages.  But if the trend does not start to revert itself, if 35% of the wealth owned by 1% of the people becomes 40%, then 50%, will the American worker continue the revolution of seeking income elsewhere?  Will that trend result in a new work pyramid, with less levels and less disparity between top and bottom? 

I imagine that I will have retired from the work force before these questions are answered but hope for my children that they will be able to boast that their generation created a new work dynamic without the bloodshed that previous revolutions required to change the system of their times. 




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