Lisa Arroyo feels “fulfilled” and accomplished, thanks to beauty products company Mary Kay. She speaks enthusiastically. She combines her words with laughter. She repeatedly quotes the founder of the renowned American network marketing company famous for driving a pink Cadillac, Mary Kay Ash.
“Mary Kay has a very firm foundation, which is God first, family second, and work third. And I can do it in my free time. I’m my own boss,” says Arroyo. Under these precepts and with the birth of her daughter some 20 years ago, she joined the company’s sales group for the first time, which already exceeds 3.5 million members worldwide. In 2021, Mary Kay generated $2.7 billion with just 5,000 employees.
In eight months, Arroyo built a team of more than eight consultants to sell Mary Kay products and generated sales volume that she was satisfied with. “Then I had my second baby, and I didn’t do Mary Kay anymore.” That was until she became a widow a few years ago and battled with depression, rejoining the group of consultants. “I have a job (in a department store), and I make good money. I don’t need to do Mary Kay, but it’s what I want to do,” she says.
Lourdes Valentín speaks in similar terms about the company Pure Romance, which specialized in products that are marketed for sexual well-being. For Valentín, this organization “is a business that transforms lives; it’s a business that transforms women; It’s a business that gives you the opportunity to give yourself that self-esteem that many women don’t have.”
While Laura, who prefers not to be identified by her real name, sold the Monat hair products line, and while she no longer does because she decided to focus on developing her career as a communicator, she does not rule out returning to the army of consultants in a more structured way.
Beachbody is another multi-level company, whose distributors are called “trainers” and specializes in fitness training programs and supplements. Each coach must reach a monthly minimum of points, called “personal volume,” which is assigned to the sale of products, programs, and memberships to attract new coaches or “preferred customers” through a monthly fee of $15.95. The recruiter will benefit equally from the trainers they have brought into the company.
Mary Kay, Pure Romance, Monat, and Beachbody are some of the most popular multi-level companies in Puerto Rico. The Direct Sales Association (DSA) estimates that in 2021 there were 130,681 people involved with a multi-level company in Puerto Rico.
Also called network marketing, these companies need the constant recruitment of new representatives and consultants, whose sales feed the commissions of other people at higher levels of the organization and contribute income to the company. Their main target is women. According to a study carried out by AARP in 2018, 60% of the people who worked in this type of company in the United States are women. According to the DSA, whose statistics do not include all companies, it was 76% in 2021.
These companies take advantage of the desire or need of many women to balance family life and motherhood with work that promises them flexibility. Supposedly, as Arroyo said, the sales will be done in her “free time,” but, under Mary Kay’s tenets, for example, that will happen after dedicating time to God and family and, to that agenda, Arroyo also has to add the time she spends at her regular job at a department store.
“Capitalism penetrates within that affective circle called home little by little, which was originally designed for other things because what money wants is to reproduce itself. Work shifts. That separation between home and work will blur,” said Mabel Rodríguez Centeno, historian, and professor in the Department of Humanities at the University of Puerto Rico’s Río Piedras campus.
As Rodríguez Centeno explained, “in historical capitalism, really, work was designed for the man: that person who had the possibility of exercising politics through full enjoyment of citizenship. So, capital finds a way to reproduce itself from within the home, and this, definitely, is called the culture of effort.”
What do these companies have in common in terms of the way they operate? The form of compensation consists of commissions, bonuses, and discounts on products that increase as the representative moves up in ranks within the structure. “Everything depends on my effort,” Arroyo reiterates.
“When I tell you, for example, that if I sell $300 today, my profit is $150, that’s the day’s profit. Besides that, when you have consultants, you earn commissions and the commissions start from 4%, 9% or 13% of what they buy,” Arroyo explains.
Unreal promise: The path in multi-level starts without knowing how much will be earned
The promise of a successful future requires, however, an initial investment. At Mary Kay, for example, the path to earning a pink Cadillac — the biggest incentive the company offers its consultants who, among other things, generate a certain level of sales — starts with a “Business Set” that can start as low as $30 for a “quick start” or $130 “for those who are serious,” according to its website.
Those first months of sales are key within the Mary Kay business structure, which offers incentives, economic bonuses, and prizes, such as more products or greater discounts to those who reach certain sales goals in this stage. These incentives seem to be aimed at injecting enthusiasm and growth expectations into the consultants.
“At first, I did super well. In the first month, I had a profit of about $2,000,” says Dayra Berríos, who, in addition to selling beauty products, is an accountant. In the months that followed, she says she netted between $500 and $600 working about 15 hours a week, which she saw as a positive. The equivalent would be between $8.30 and $10 per hour. “I stayed very active on social media,” she points out as the key to her early success.
Interviewees often minimize content creation and social media management when estimating the number of hours worked, as they can fit these tasks into pockets of time, between daily chores. For example, Berríos estimated that she spends an hour creating content for social networks, but she did not specify how long it took her to respond to messages and questions from clients through these platforms, and she overlooked calculating the time dedicated to events that are completely online, such as a “Pink Bazaar,” which consists of promoting offers and products every hour for a day through WhatsApp.
“There were many direct sales companies [and] people get tired or try the product and don’t like it,” says Berríos, who remains a Mary Kay consultant mainly because she uses the products, and believes she benefits from the 50% discount she gets as consultant even when she doesn’t resell the products she purchases.
Staying active also requires a minimum purchase, although this may vary over time. In the case of Mary Kay, the independent consultant must make a total purchase of $1,200 every three months, Berríos explains. However, with the 50% discount that the saleswomen get, they end up paying $600, which translates to a monthly investment of $200.
According to Mary Kay’s current 2020 compensation guide, being an Independent Beauty Consultant is the first of 14 levels. “Senior” is added to her title if she maintains one or two active recruits and becomes a Star Team Builder by having three or four active members.
In other words, the team builder may have recruited 10 or 300 people but will drop in rank if only one or two make the $200 monthly purchase. The next level, Team Leader, requires between five and seven active members, and so the levels and demands continue to grow, including minimum parameters in terms of total team sales and the obligation that your “descendants” (offspring) also maintain certain levels.
“Right now, I’m a team leader moving toward the executive ranks again, thank God,” says Lisa Arroyo, who has to reach the proposed goal to keep the consultants who are at lower levels enthusiastic about the sales project or recruit new consultants. At the same time, those who are at a higher level than Arroyo, need her to stay in the team and with consistent sales to protect their ranks or levels within this business structure that depend on third-party participation.
To avoid becoming inactive and being ousted from the structure, some representatives, such as Dayra Berríos, don’t always sell the items they buy, but rather invest in products that they accumulate, even when this means reducing their net income. “I buy the product just to keep it in inventory; I buy it from my earnings,” she explained.
The month before our conversation, Berríos had a net profit of $250, which would be the equivalent of $4.16 an hour if she had worked her estimated 15 hours per week.
Lisa Arroyo, also from Mary Kay, chose not to share her earnings beyond mentioning that her sales goal is $300 per day and therefore earning $150. “There are times that I have succeeded, and there are times that I have not.”
With Pure Romance, Lourdes Valentín said, “there are months when I can sell $1,000, $2,000, $900, $600.” Based on the premise that this was her net income, in a month, Valentín made, in the best of cases, the equivalent of $16.67 an hour, in an average 30-hour work week. At worst, she made $5 an hour. This does not include commissions.
Laura, from Monat, earned $1,092.15 adding sales and commissions in her best month, or $6.82 an hour when she was working full time. Carla Fabiola Ramos, a Beachbody coach, averaged her most stable income at $16.02 an hour through 2022, working about 24 hours a week selling fitness programs, equipment, and supplements.
Transportation and shipping costs that apply to some of the vendors from those estimates have to be subtracted, and there are even those who invest in social network managers, which can cost between $11.51 and $24 an hour in Puerto Rico, according to estimates from job-search websites, such as Indeed and Glassdoor.
All companies mentioned are U.S.-based. The Federal Trade Commission (FTC) warns that most people who join a multi-level marketing (MLM) company make little or no money. On the other hand, an AARP study revealed that in 2018, 47% of participants lost money, 27% experienced no gain or loss, and only 25% generated income.
Professor Rodríguez Centeno believes that “in that culture of effort, in latitudes like ours — latitudes of indebtedness, impoverishment, austerity — you must do whatever it takes in exchange for something. And this is like a kind of fanciful promise of economic autonomy,” she said.
One of the criticisms that the FTC and organizations like AARP shoot at these types of businesses is that many don’t provide an average or median profit that provides transparency before a potential salesperson joins any team. Instead, they are presented with a compensation plan, which in many cases is nothing more than a table with all the levels indicating the requirements to move up to the next step, in addition to the benefits. Others, like Pure Romance, are more accurate. In this case, the median earnings of the associates for 2020 was $111 per year, when calculating what was generated by the entire team linked to each associate. This figure does not include operating expenses.
For Valentín, from Pure Romance, the income of a recruit will depend solely on the salesperson’s diligence and determination. “Your work will depend on your effort and what you want to earn. You set your limits. You decide how much you want to earn weekly, monthly, daily,” she said. “We can't tell her ‘You can earn $300 a week, $200 a week,’ because what if she doesn't work for it and what she works just to earn $50? What if I tell her $300 and she works to make $1,000 a week?.”
The promise of a different life regardless of gender expectations and instability
For Rodríguez Centeno, the narratives of progress bump productivity against leisure and convert both into moral values. The result is a society that blames laziness for its failures. That is the hook of many of these companies’ speeches, whose description of work as a lifestyle "may have a viability as an exploitation strategy," she said.
“When we talk about work, it’s always, in some way, about the exploitation of some bodies for the enrichment of others,” the professor added.
In the case of multi-level companies, she suggested that “they’re taking advantage of an entire motivational industry [and the narratives of freedom and financial autonomy] to recruit them from those stipulations of what it is to be a modern woman of the 21st century.” After all, Mary Kay Ash is said to have founded her company in 1963 in response to the gender discrimination she would face at other companies, and Patty Brisben founded Pure Romance in 1993 from the basement of her home, raising her four children alone.
“What is important for the capitalist economy is the reproduction of profit and what must be said to achieve this is the least of its worries. Today it’s ‘empowerment,’ but tomorrow it will be what is aligned with their interests, whatever it is,” Rodríguez Centeno explained.
Valentín was a nurse, but she no longer sees it as an option. “I was making $22,000 a year as a registered nurse,” she says. Furthermore, she claims that her return to Pure Romance is because she “loves” the company. “You have no money limits here.”
Among the interviewees, there are also recently dismissed teachers and communicators, for whom the definitive step toward a multi-level company was not the company itself, but job insecurity and uncertainty. According to the Puerto Rico Department of Labor and Human Resources, the labor participation rate for women is 33.5%, in contrast to 49% for men.
In addition, in 2019, the group of occupations with the highest proportion of women was “health support,” such as nursing assistants and home caregivers, with an average annual salary of $19,820, according to Census data. This is a poverty wage since the threshold for a person with a dependent is $20,172.
Added to this scenario is the wage gap between men and women, which according to an analysis by the firm Estudios Técnicos is over 20% and is exacerbated with higher academic studies. A man with a bachelor's degree earns 27% more than a woman with the same degree, while the disparity is 37% for those with a master's, professional or doctoral degree.
Only one of the interviewees is a full-time distributor. Most, however, began their journeys in search of an additional source of income. The majority is also the main person responsible for household chores.
Pyramid or multi-level: a fine line
Is selling or recruiting more important? Arroyo, of Mary Kay, believes both are because “this is a boat with two oars. You have to sell and recruit; what we call the complete cycle.”
“Both are important because I want to have my team, but (what is also important) are the daily sales, whether they are in my online store or in person,” said Valentín, from Pure Romance.
MLMs are frequently compared to pyramid schemes, which are illegal due to “the need for indefinite recruitment,” said Attorney Jorge R. Quintana Lajara in an analysis of the legality of the system in Puerto Rico.
“So, who truly gains the greatest economic benefit will be the original distributor and the first to join the network, since they will receive a commission for each new distributor that joins. However, the last distributors that join the group generally have losses, since there isn’t an infinite number of people to recruit, even considering the planet’s total population,” he said.
To distinguish the two sales systems, the FTC explains that if the network “is not a pyramid scheme, it will pay you based on your sales to retail customers, without having to recruit new distributors.” Conversely, if it is a pyramid scheme, "[y]our income will be based primarily on the number of people you recruit, not the number of products you sell."
That line is usually thin, depending on the MLM. In her best month working full time for Monat, Laura generated $1,092.15. Of that, 59% came from her organization, as the group of recruited representatives are called, in this case. The remaining amount came directly from her sales.
These companies’ playbooks dictate that the first line of potential clients and recruits are the distributors’ friends and relatives. So, they can ultimately financially exploit the circles of their distributors with each recruit’s initial investments or purchases, out of pity or support, by their close ones.
“I wouldn't have bought the products if it hadn't been for her,” says Alondra (not her real name), about a friend who worked in Monat. Her economic situation was not the best, but she bought products that she considered overpriced to help her friend. “Our friendship was never broken, but I avoided her for a long time,” she says of the saleswoman's insistence.
The recruitment process also requires training and keeping the team motivated to generate sales and continue recruiting. This forces more hours of work in weekly meetings, consultations through text messages and other strategies, which in some cases include gifts.
At the end of the day, Laura from Monat felt “that the people under me were not doing the job of recruiting people and getting clients. The business, in the long run, was not so sustainable, and that’s why we see that it fails.” That was the reason why, like her, one of her star representatives also left the company.
But not all cases or experiences are the same. Carla Fabiola Ramos said that 90% of her income with Beachbody is from her sales and the rest from the sales of her recruits. “You have to be very aggressive and I, in that sense, have not taken the step. I’m very careful not to hurt friendships by insisting on something.”
“We’ve been around for a long time, and I think we will continue. We have the stigma that we’re a pyramid, and pyramids are illegal, to begin with. [With] us, there is an exchange of products through a business transaction,” she says.
The success of the MLM
Direct sales is a $186.1 billion industry worldwide, according to the World Federation of Direct Selling Associations.
Quintana Lajara explained that success in this type of commercial activity “lies in eliminating fixed costs in the product distribution chain, for a greater return on investment” for the producer or seller. Because the distributor is an independent contractor, the original producer reduces their costs, since they do not have distribution expenses, eliminating the expense of a marketing department and the cost of maintaining a permanent workforce. In addition, they avoid the cost of product delivery and after-sale services.”
“All these costs are transferred to the network’s independent contractors or distributors, now owners of their own business,” said Quintana Lajara.
Valentín admits that in Pure Romance, “you don't have any benefits, like, medical plan, vacation, nothing like that, like a regular job.” However, the consultant minimizes the loss of these benefits over the promise that “the advantage is that you will make more money than a regular job,” she says confidently, although in most cases, this is not the reality.
When money exploits the bonds among women
According to its promoters, MLMs foster a culture of support, ties, and sisterhood. In the case of Mary Kay, and in others, the recruiter is called “mom” and the beauty consultants are called “daughters.” It seeks to create a community. A family.
From the sociology standpoint, studies confirm that these types of companies capitalize on the lack of recognition of women and use it as a “magnet” to attract them. In addition, they have identified “social recognition and personal fulfillment” as the biggest incentive among the most successful consultants and suggest that these motivational strategies influence sales and the commitment to the company, said sociologist Virginia K. D'Antonio.
“Mary Kay said that every person had an invisible sign around their neck that said make me feel important,” says Lisa Arroyo. The phrases “Girl Power,” “Boss Babe” and “you are what you attract” are repeated together with the words “empowerment” and “resilience” to project that achievements are exclusively the result of work. So, they promise personal growth even if the economic reward falls short. Its advertising focuses on the rare cases, such as the nearly 164,000 independent saleswomen who Mary Kay says have attained Mary Kay's pink Cadillac for 53 years. Today, less than 1% of consultants are “eligible” to earn it.
Reporter Valeria María Torres Nieves contributed to this story.