I’d be lying if I said I wasn’t tempted every time an influencer tells me that I could be making money in my sleep by following their simple steps. Whether it’s designing T-shirts to sell online, creating an online course or having a rental property, in this economy it’s hard to not get swept up in the dream of making easy money. Sorry to burst the bubble, but: Passive Income Doesn’t Exist. Sure, there are lots of ways to make money, but someone is always working to make that happen – even if that person is not you.
Passive, really?
Before we get into the ethics of ‘passive’ income (because of course we’re going to talk about the ethics), let’s examine those claims of passivity. It’s always sold as a money-making strategy that requires low or no effort on your part, with money just streaming in after some initial set up. But that is never true.
Take online courses, which have been pushed as a passive income gold mine since at least 2015. In theory, you just tap into an area of expertise you already have, record yourself explaining said topic, and publish it to your website or a site like Skillshare, Coursera, or Udemy. Once it’s live you’ll have a constant revenue stream of people learning from you with no further work necessary, right? It completely glosses over the significant amount of work involved in creating a high quality course. If you don’t already know how to teach, how to create high quality video, or how to produce educational resources, you’re going to spend a lot of team learning how to do those things.
The passive income gurus who tout selling online courses and simple digital products also ignore the significant amount of marketing required to make even a single sale. There are roughly 30,000 courses on Skillshare, 60 million products on Etsy and an unfathomable 350 million products available for sale on Amazon Marketplace. Simply having your product discovered will require consistent effort. Brigitta Ryan, a creative who frequently points out the fallacies of ‘passive income’ on her TikTok account, explains it best: “To make this work you have to churn out hundreds and hundreds of [digital] products with slight variations, to make sure your [Etsy] store ranks well. And you have to become an SEO genius, you have to spend hours doing SEO research.”
Ongoing marketing, keyword research, staying on top of trends, adapting your listing information, creating and posting on social media all take time and sometimes money. Without these efforts, the income stream loses momentum, making the idea of passive income once again an illusion. Does it still sound chill and passive to you?
Effort-heavy ‘passive’ businesses are not confined to the digital world. Arguably the most common passive income streams that have been pushed for generations are: rental properties and investing on the stock market.
Sure, while rental properties generate income, they come with responsibilities that demand active involvement. Landlords (well, good landlords, if those exist) must handle tenant enquiries and keep up with maintenance to ensure the property is in good condition. If the landlord is not doing that themselves, then they hire a property manager who does the work for them. Because there is work involved – you can’t set and forget a house.
And being a ‘serious’ property investor is similar to investing in the stock market, as it requires continuous monitoring, research, and decision-making to maximize returns. Without active management and informed decision-making, the potential for passive income basically becomes non-existent.
The misconception that this money can generate itself often leads to disappointment and frustration when individuals realize that continuous work is necessary to sustain the income stream.
@jolie.rain I don’t subscribe to the passive income anymore. I don’t believe in it. It’s easy to get sucked into something when they tell you’ll make 200$ a day 🙃#passiveincometips ♬ original sound – Jolie Rain
Whose labour is being used?
The only people who are able to kind of achieve passive income are the uber wealthy. Billionaires. Jeff Bezos adds US$500 to his wealth every second – but even that is not passive. A billionaire’s wealth is built upon complex systems that rely on the tireless work of countless individuals. From dedicated employees who ensure smooth corporate operations, to contractors who construct and maintain their assets, to exploited manual workers, there is an extensive network of people who work to generate that so-called passive income.
For Bezos, his wealth and ‘passive’ earning is tied to the performance of Amazon on the stock market. And Amazon’s performance is dictated by the expansive web of employees, logistics reams, manufacturing and factory workers and delivery drivers that keep the company running smoothly. While Bezos wealth grows “on its own”, those in the lower ranks of the Amazon workforce face strenuous working conditions, inadequate compensation, and job insecurity. In 2021, Amazon’s serious injury rate was 6.8 per 100 workers – double the rate (3.3) for all other warehouses in America, according to data compiled by the Occupational Safety and Health Administration (OSHA). OSHA also reported that Amazon failed to keep proper worker injuries and illnesses records, citing recordkeeping violations at six warehouses, giving us reason to believe that the working conditions are much worse than the current stats. There are ongoing investigations into Amazon’s working conditions, with Bezos continuing to pushback against these allegations, all in the name of profits.
While the average side hustler is not on the same level as Bezos, it’s important to recognize that even with seemingly passive income streams someone is always working – even if it’s not you. Who is manufacturing the item you’re dropshipping? Who produces the tshirts or notebooks for your print-on-demand business? Who works at the businesses you invest in?
We don’t need this distraction
The appeal of passive income is totally understandable. Living has become very expensive, and we’re now working even harder for less money. Chasing passive income means you’ll waste even more time and even more money trying to achieve something that doesn’t exist.
Instead, what would happen if we directed that energy into correcting the imbalance between those who do the labour (that’s probably you, a worker!) and those who earn the wealth (known as the “owning class”)? We demand our politicians tackle issues like wage theft, wage equality, anti-competitive behaviour (i.e.: monopolies and duopolies), providing basic standards of living and opening up opportunities through education and training.
To achieve any of this, we’ve gotta stop acting like “temporarily embarrassed millionaires“. Originally coined by writer John Steinbeck, the term describes people from the working class who support policies that benefit the wealthy. Under the misguided belief that they will one day become a millionaire, they vote with this fantasy version of their future self in mind. By supporting legislation that reinforces the unequal distribution of wealth and power – tax cuts, deregulation, inadequate healthcare or welfare – we let the rich get richer, and lock ourselves into a cycle of working hard for little reward.
Smart people read more:
5 Financial Advice Books Written By Women To Help Set Yourself Up For the Future
The jobless Americans chasing the dream of ‘passive income’
‘It’s bullshit’: Inside the weird, get-rich-quick world of dropshipping
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