The jobless Americans chasing the dream of ‘passive income’
Aubrey, a 26-year-old in Florida, does not recommend working at a hotel in the middle of a pandemic. The floors were constantly understaffed and inventory seemed to disappear overnight. In fact, Aubrey was genuinely relieved when she was finally laid off. And like so many newly occupation-free members of the American workforce, Aubrey turned to the internet and searched for any sort of minimal-effort side-hustle that seemed feasible.
Aubrey found hope with what she describes as “low-content books”. With just a layperson’s grasp of graphic design, Aubrey was able to flood the Amazon marketplace with a tide of scholastic notebooks, graph-paper pamphlets and crossword collections. There is no real writing involved in the low-content book scheme, which is exactly the point. All Aubrey needs to do is come up with an appetizing front cover and trust that the shadowy algorithm takes care of business. “My most successful product is randomly a ‘vegetable’ blank lined notebook where I just scattered some pictures of cartoonish onions, pumpkins and leeks on the cover,” she tells me. “It has done pretty well and is about $200 of my sales.”
Aubrey isn’t breaking the bank, but she’s emblematic of a growing contingency in the global economy that’s lured by the hope of cobbling together “passive income” streams online. More than 47 million people quit their jobs last year, leaving many to exchange their long-term career ambitions with low-stakes schemes to make money from home.
Interest in the r/passive_income subreddit, where users swap tips on earning extra cash, skyrocketed throughout the pandemic, while Google search inquiries on “passive income” have more than doubled since March 2020. And more people are now making money through unconventional means – the number of self-employed people who reported “unincorporated” work (meaning they weren’t tied to a specific company) has gone up from 8.8m in March 2020 to 9.3m in March 2022, according to the Department of Labor.
There’s a genuine reorientation in the nation’s labor philosophy, and it seems to grow more fervent with each passing day. “As a result of the pandemic, most people realized that a seemingly safe job or industry can change overnight, and we really can’t predict those circumstances,” says Dorie Clark, a professor at Duke’s Fuqua School of Business and the author of Entrepreneurial You. “The best security comes from having multiple income streams and diversification. When we can’t know the future, you need to place multiple bets.”
Nobody should take a get-richquick scheme at face value, but it’s not hard to understand why Americans were more motivated than ever to wrest control of their own financial fate. We all spent 2020 simultaneously bored and terrified as the economy tanked and the contagion spread. Many of us found ourselves out of a paycheck, and more importantly, reconsidering our foundational conceptions of work. Trauma and clarity are congenitally entwined, and after a year stuck at home, disgruntled employees wondered aloud if they were truly happy returning to a life of clocking in and out.
It’s not that Aubrey particularly relishesher low-content book ruse, but at the very least, it doesn’t make her hate her life. “The pandemic was almost a blessing in disguise because I was ready to work at that hotel for the rest of my life,” she says.
It’s enticing to believe that your savings account could swell by the turning gears of idle clicks. Yes, it’s possible; the pandemic has transformed some career nine-to-fivers into overnight barons. Just ask Kat Norton, a 28year-old in Long Island, who was condemned to her home in 2020 after her consulting job restricted travel in accordance with the lockdowns. Norton suddenly had a lot of time on her hands, so she started uploading quirky Excel tutorials on TikTok. Those videos went viral, and within months Norton quit her job to create a platform called “Miss Excel” – where she creates tutorials for the whole Microsoft Office suite. Norton tells me she works about 20 hours a week, and that her business is now worth over $1m. Everything fell into its right place.
“The pandemic was a massive pattern disruptor,” she says. “A lot of times your day job feels a lot less glamorous when we’re working from home. Travel was the fun part of my job. When I was whipping out securitizations from my childhood bedroom I was like, ‘Dang.’”
Norton took full advantage of her newfound liberty. She and her boyfriend roamed the country as digital nomads, renting a house for a spell in Hawaii or California every few months, living the good life. (Norton has since bought a permanent home in Colorado.) It’s an incredible success story and also a total outlier from the mean, but that hasn’t stopped a tide of charlatans willing to sell their guarded secrets of passive income salvation, as if anyone can immediately start raking in easy revenue if they simply know what buttons to push.
It’s a tale as old as time. In 2019, Alana Semuels covered a story for the Atlantic about a New York couple who bought a $3,999 training course from the e-commerce partnership of Matt Behdjou and Mike Gazzola, two of the more famous gurus in the passive income universe at the time. The course promised to teach them how to resell items imported from China at a massive profit through Amazon. But the products were difficult to distribute at scale, and the couple quickly found themselves $40,000 underwater. The fantasies of financial freedom through ambient gains revealed themselves to be laughably counterfeit, all engineered by a pair of scammers who left their clients holding the bag. (Behdjou and Gazzola were eventually sued by Amazon.)
“It may seem obvious to an outsider that most people aren’t going to become rich by selling things on Amazon,” wrote Semuels. “But that’s the thing about gold rushes: Some people do find gold, and it is sometimes hard to tell what distinguishes the people who make it from those who don’t.”
Indeed, it’s easy to fall into this trap the deeper you delve into the passive income universe. YouTube is littered with young influencers promoting their financial wisdom – usually conjoined with questionably optimistic thumbnails. “9 Passive Income Ideas, how I make $27,000 per week,” reads one, uploaded by one prominent advice-giver named Ali Abdaal. One of the ideas he mentions? Selling classes online. Abdaal uses one of his recent webinars as an example: It’s titled “Starting a Successful Side Hustle”. Effectively, Abdaal is telling his viewers that an effective way to harvest cash out of the ether is to teach others to do the same; an ouroboros that proves just how flimsy the precepts of passive income can be.
But many people who entered this ecosystem during the pandemic are charting a far more realistic future. Brett Parsons, a 41-year-old dad in the Bay Area, simply wanted an outlet that melded his pecuniary and emotional interests. He’s a longtime tabletop gaming hobbyist, and enjoys painting miniature plastic soldiers that add up to Warhammerarmies. As the world ground to a halt, and his fulltime career was left in stasis, Parsons started selling his models on eBay. Covid proved that there didn’t need to be a discernible difference between what he did for work and what he did for fun.
“I realized I could use the extra income to pay rent, and to support that by selling an army would be great. I sold my first army for 400 or 500 bucks,” says Parsons. “It’s almost like I’m getting paid to do therapy … It relieves stress for me and makes money at the same time.”