April 01, 2016
The Opportunities and Risks of a New Economy
by Joseph N. Mariano
Long before social networking, direct selling brought individuals together in social settings to get great products and services into the hands of family, friends and others. As technology has evolved, demand for people who value flexibility and an opportunity to be their own boss continues to rise. New technologies are particularly exciting for direct sellers, allowing them to build their businesses by reaching more customers in more targeted ways than ever before. In fact, the appeal of an on-demand economy made more meaningful by social connections has encouraged many millennials to consider direct selling. These younger, independent businesspeople are attracted to the channel for the opportunity to interact with a diverse and increasingly interconnected network of potential consumers.
While social technologies continue to drive our sales channel forward, as well as other types of retail, it’s important that policymakers and the regulatory community not rush to judgment when it comes to determining if increased interest in independent work is deserving of worker reclassification.
Unlike some other types of independent work, direct selling is a predominantly, but not exclusively, part-time pursuit that helps millions of entrepreneurial-minded Americans supplement their income. These opportunities allow parents with young children, students, caregivers, retirees and military spouses a chance to run their business in the way they see fit. Were it not for direct sellers’ treatment as independent contractors, they would not have the flexibility to manage their businesses and juggle business with other family and personal priorities.
Direct selling started as and will remain a people-driven business defined by superior customer service. The heightened level of customer service provided by independent businesspeople has been further supported by the advancements in social technologies, making it easier to work independently. These opportunities provide direct sellers a chance to differentiate themselves and their business, helping them define success in their professional and personal lives.
While the current attention being paid to independent work results from interest in the new, technology-driven economy, DSA has been reinforcing the value of independent contractor status for direct sellers repeatedly in powerful ways over many years and in response to many different proposals. We will continue to do so. Last year, DSA partnered with the American Action Forum, to put on events for policymakers that explained the value of direct selling in the broader context of independent work. And just last month, I appeared on a panel hosted by the Coalition to Promote Independent Entrepreneurs, where a noted labor economist and representatives from three independent contractor industries, including direct selling, discussed how the independent contractor model adds value to workers and our economy.
I was heartened by Federal Trade Commissioner Maureen Ohlhausen’s guidance last year that policymakers adopt a posture of regulatory humility to be certain that independent workers, a vibrant and growing segment of the economy, are not harmed as a result of overreach. As this debate continues to develop, DSA will continue to serve its members by remaining at the forefront of this latest conversation about independent work and the direct selling channel’s place in an on-demand economy.
Joseph N. Mariano is President of the U.S. Direct Selling Association.