Is Gen Z the Future of the Channel?

Jan 31, 2022
By DSJ Staff

Generation Z is turning twenty-five this year. America’s youngest workers have only been in the labor force for less than a decade, but they have already made quite an impact on businesses everywhere, from their demands for new workplace norms to their insistence on companies helping them drive positive change in the world. 

Gen Z—those born between 1997 and 2012—comprised just 11 percent of America’s workforce in 2020, according to the US Bureau of Labor Statistics, but is estimated to make up 30 percent of the US labor force by 2030. This generation has been greatly affected by the COVID-19 pandemic in terms of job loss, the highest unemployment rate in a century, and stress-related mental health issues. However, even with the highest levels of anxiety and depression of any generation, they press on with purpose-driven resolve to create the change they want. 

That resolve is most noticeable in the workplace. Gen Z are unlike any previous generations when it comes to sharing their perspectives on work. They openly question authority, dismiss antiquated office habits, demand diversity in the workplace (and especially in leadership), insist on pandemic-proof working environments, and advocate for environmental and social activism. They have also firmly announced their intention to protect their health and family life above all else.

Indeed, Gen Z has brought “a fresh adjustment of behaviors and ideas” into the labor force. They are passionate, pragmatic, at times provocative, and likely progressive on social issues. But are they the future of direct selling?

Suited for Side Hustles

Not only do Gen Zers have the desire for entrepreneurship—a 2020 Nielsen study found that 54 percent of Gen Z stated a desire to start their own businesses—but they also have the technical skills and social media savvy to support their business ventures. As digital natives, they are better suited than previous generations to start their own small businesses, especially now that e-commerce has exploded and immersive technologies with which they are familiar have become more prevalent tools to reach consumers.

The technological and digital advances over the last two decades have contributed to their diverse talents. The Gen Z worker, by comparison, is far removed from the baby boomer, who was typically trained in one specialized field and usually spent his or her entire career within that realm. Gen Zers have lived through an accelerated pace of innovative technology and modes of communication, enabling them to develop expanded skill sets. And as modern technologies emerge, they will have even more tools to adapt to the business landscape.

As Deloitte pointed out in a 2021 examination of Gen Z with the Network of Executive Women (NEW), the world will continue to evolve and change. Gen Z is perfectly positioned to be what Deloitte and NEW suggest is needed in the future—a “Renaissance figure” with digital and technology skills, a comfort with analytics and data, business management skills, and design and creative skills.

Already, Gen Zers have embraced side hustles, often running more than one gig business at a time in an effort to hedge their bets against job insecurity in this COVID era. There are myriad stories of these young entrepreneurs taking their first steps into business ownership, including those in direct selling.

About Gen Z

  • Born between 1997 and 2012
  • 67.06 million in the US  
  • 20.35 percent of the US population

(Statista, September 2021)

What Gen Z Wants

Millennials continue to be the largest group of direct sellers in the United States, followed closely by baby boomers. In 2020, Gen Z comprised just 6 percent of the 7.7 million direct sellers in the US, but that equates to nearly half a million young adults—none older than the age of twenty-three—who had started on the path to business ownership. 

More are planning to do the same. And that makes sense because this is a generation of entrepreneurial-minded individuals who crave the flexibility to try different things. And flexibility is key. According to an August 2021 survey conducted by Bankrate and YouGov Plc, 62 percent of Gen Zers stated that flexible work arrangements were the top priority when considering job opportunities.

Of course, flexibility is the bedrock of the direct selling business model. Entrepreneurs have always had the ability to work as much as they want, when they want, and from where they want. But flexibility alone will not help direct selling companies attract more Gen Zers to the industry. Companies hoping to bring Gen Z into their fold should also pay attention to Gen Z’s other needs. 

A Livable Wage

According to Bureau of Labor Statistics data for 2020, although Gen Z represented just under one-fifth of hourly paid workers in the US, they made up 48 percent of those paid the federal minimum wage or less. It’s no wonder Gen Zers were among those who last year advocated for lawmakers to increase the federal minimum wage from $7.25, where it has stood since 2009. 

New workers entering the labor force have historically landed in sectors that are noted for lower wages, such as the hospitality and retail sectors. But while the minimum wage has not moved in thirteen years, the cost of living has risen, leaving many Gen Zers without the financial means to provide for themselves.

A recent Realtors.com Monthly Rental Report stated that rents rose five times faster in 2021 than 2020, with the cost of rent, on average, 10.1 percent higher in 2021. The national median rent for a one-bedroom in December 2021 was $1,651, up 19.3 percent from 2020. A quick calculation will show that a forty-hour work week at minimum wage will not come close to securing housing for Gen Z workers making minimum wage.

In addition, labor shortages and supply chain disruptions have caused food prices to go up. Last November, the US Department of Agriculture’s food-at-home index rose 6.4 percent year-over-year. The index, which tracks grocery store and supermarket food purchases, showed that the prices for meat, poultry, fish, and eggs increased by 12.8 percent. Expectations are that in 2022, inflation rates will continue to cause prices to rise.

So it is understandable that Gen Zers believe they are not paid fairly—and the reason so many have left their jobs in search of higher paying opportunities. While twenty-six US states will raise the minimum wage this year, Gen Z will continue to seek out opportunities to increase their earning potential. As they reevaluate options, direct selling becomes a viable choice as work that pays a living wage.

A Healthy Work–Life Balance

Like millennials, Gen Z insists on a healthy work–life balance. It makes sense that it should be of such great importance to them. For a generation encumbered by high levels of stress, having a healthy work–life balance is essential to maintaining good mental health.

The Deloitte Global 2021 Millennial and Gen Z Survey, released in June 2021, shared that Gen Z—along with millennnials—are making mental health a priority at work, and companies wanting to help them thrive “need to prioritize mental health and embed a workplace culture where stigma does not exist.” 

In the study, millennials and Gen Z employees in senior roles were asked to list top priorities beyond revenue and profit. What was the most important to these two groups was ensuring a good work–life balance and supporting employees’ physical and mental health. Unfortunately, the survey also revealed that only 20 percent of millennials and Gen Z believe their employers are enabing that work–life balance, with three in ten respondents saying the employer support is poor.

For companies to achieve success in the coming years, it will be critical to establish a healthy work–life balance to retain Gen Z workers. 

Mental Health Resources

Gen Z has elevated levels of stress compared to some of their older generational cohorts. According to the American Psychological Association (APA), more than nine in ten (91%) of Gen Z adults admitted to experiencing “at least one physical or emotional symptom because of stress,” with only half of all Gen Zers believing they successfully manage their stress.

It is not just COVID-19 and its aftereffects such as work-from-home mandates, social distancing, and vaccination debates that have caused widespread depression and anxiety among Gen Zers. In 2019, mass shootings topped the list of stress-inducing events for them. Immigration issues and sexual harassment were other sources of major anxiety. That year, in fact, a large majority of Gen Z respondents to a Harvard Business Review study stated that they had left a job for mental health reasons. More than half of the overall respondents to that study cited their company’s inadequate attention to mental health care for workers as the impetus for their decision.

And that was before the pandemic.

This past October, the APA released “Stress in America™ 2021: Stress and Decision-Making during the Pandemic,” which was conducted by The Harris Poll. In the survey, 37 percent of Gen Z said they struggle to make basic daily decisions, such as what to eat and what to wear. 

The survey said that even with the struggles, most adults, including Gen Z, retain a positive outlook and believe once the pandemic ends things will return to normal. Companies offering Gen Z emotional support in the workplace and providing mental health resources will have an advantage over other companies looking to onboard this generation.

Gen Z is the most racially and ethnically diverse generation:

  • 52% identify as White 
  • 25% as Hispanic
  • 14% as Black 
  • 6% as Asian
  • 5% as other races or two or more races

The US Census Bureau projects that by 2026, the majority of Gen Z will be non-white.

(Pew Research Center, 2020)

A Diverse Work Culture

Gen Z is, according to the Pew Research Center, the most ethnically and racially diverse generation, with 52 percent identifying as White, 25 percent as Hispanic, 14 percent as Black, 6 percent as Asian, and 5 percent as other races or two or more races. The US Census Bureau projects that by 2026, the majority of Gen Z will be non-white.

Growing up with such diversity within their group, Gen Z expects that they will find the same in their work environment. According to Monster.com, 83 percent of Gen Z candidates consider a company’s commitment to diversity a crucial factor.

Yet, there are differences in what diversity means between generations. Unlike baby boomers and Gen X, who historically considered diversity along age, gender, and racial and ethnic lines—or even millennials, who are driving diversity, equity, and inclusion (DEI) initiatives—Gen Z has an expanded meaning for diversity: their definition includes marginalized people who have been discriminated against based on sexual orientation or gender identity.

According to a study by Tallo, 67 percent of Gen Z workers have witnessed discrimination or bias in the workplace based on not only race or ethnicity but also with sexual orientation or gender identity; 44 percent have personally experienced such discrimination. Gen Z considers gender identity an important part of the diversity discussion, so much so that in the Tallo survey, 88 percent felt it important that recruiters and potential employers ask candidates their preferred gender pronouns.

In the end, businesses should realize that diversity is a strong subject for Gen Z, and the better they represent the spectrum of differences in the office and diversify their talent pipelines, the better off they will be in the competition for Gen Z workers.

A Commitment to Global Citizenry

Fifty-three percent of Gen Zers from around the world said that “society staying the same as it currently is” is scarier than “society changing drastically in the future.” That was among the findings in a McCann Worldgroup Truth Central study last year that surveyed Gen Zers in the US, UK, Brazil, Germany, and China.

Gen Z wants to make a difference in the world. This generation believes it has the power to make considerable strides in areas such as diversity, sustainability, and representation through influencing their companies and the brands they use to commit to action. 

Many Gen Zers believe this is a pivotal moment in time for the world and that the actions taken today—or those not taken—will reverberate through the coming years and have possible devastating impacts for their children.

For instance, 67 percent of Gen Z believe climate should be the top priority to ensure a sustainable planet for future generations, according to a May 2021 Pew Center Research study. Thirty-seven percent made it their top personal concern, and 32 percent acted in the preceding year to help address climate change, whether by donating money, contacting an elected official, volunteering, or attending a rally. The study found that 69 percent of Gen Zers “felt anxious about the future the most recent time they saw content about addressing climate change.”

Businesses understand that Gen Z will comprise the majority of workers in the US labor force in just a few years—as well overtake millennials as the largest group of consumers, giving them purchasing power. To attract and retain Gen Z, companies need to highlight their efforts to be good global citizens and demonstrate their commitment to the social and environmental challenges currently facing the global community and of importance to Gen Z.

How to Appeal to Gen Z

A 2020 QuickPulse Report offered new insights into how direct selling companies are attracting Gen Z to the industry. Based on DSA member request—and the interest in being future-focused—DSA added the following question to one of its surveys:

“What are you finding to be most successful in appealing to members of Gen Z?”

Responses from participating member companies were:

  • 43% (the most common answer) say the use of digital/mobile/social media is most successful in appealing to members of Gen Z
  • 14% say keeping things simple, easy, or quick is the best approach
  • 14% say Gen Z is not their audience or primary audience
  • 10% each mentioned the following:
    • Keeping prices or costs reasonable
    • Personalized service/building trusting relationship
    • New or quality products
    • Remote or flexible work
    • Having a cause or brand with a purpose

Education and Training

According to the Pew Research Center, Gen Z is on track to be the most well-educated generation ever. It has a significantly higher college enrollment rate than previous generations, and Gen Zers are less likely to be high school dropouts. But even as they trend toward college, this generation of Americans is pulled by the thought of entrepreneurship post-graduation. 

To build successful companies, Gen Z believes that colleges should teach entrepreneurship and business skills to prepare students for their futures as business owners. In lieu of these educational opportunities now available, Gen Zers in the workforce are looking to companies to provide the training they need. Gen Zers want to learn as many business skills as possible and are not opposed to leaving one job to attain an additional skill at another company. 

The advantage here is to direct selling. What draws many people to the industry is the focus on business skills and personal development. A majority of people coming into the channel have little or no sales or leadership experience, and these are areas in which direct selling companies excel. Promoting this training, particularly any involving gamification, will go a long way in attracting Gen Zers.

Additionally, direct selling companies can partner with the Direct Selling Education Foundation (DSEF) to bring entrepreneurial studies to college classrooms. DSEF has a network of professors from colleges and universities in the US and overseas who help students gain a full understanding of the entrepreneurial opportunities found in direct selling.

Access to Mentors

Another 2021 Deloitte study found that 46 percent of Gen Zers “feel stress or anxious most or all of the time.” That could help explain why many seek out mentors in the workplace. 

While Gen Z’s perspective of work sees mentorship as a logical part of learning to get work done quickly and efficiently, it also leans into the emotional aspect of connecting with an older co-worker whose life experiences can offer guidance in the workplace. 

A recent study by Bloomington, Minn.-based Springtide Research Institute found that Gen Zers generally want to work with a boss or supervisor who relates to them not only on a professional level but also on a personal level. In fact, 73 percent said they are motivated to do a better job when they feel their supervisor cares about them. 

But the study also points out that because of their higher stress levels, Gen Zers seek mentors as part of their priority to focus on well-being. Supportive mentors who show concern for the individual and not just the worker can help Gen Zers when they feel overwhelmed by what is happening in today’s world and provide guidance, and guidelines, for stress management. 

Mentoring is also an ideal way to build community within a workforce. Direct selling has a distinct advantage in this area because its business model is based on an independent business owner working one-on-one with a newcomer and then welcoming that person into a like-minded community of entrepreneurs. 

The Future of Direct Selling

“Every year . . . some new invention, method, or situation compels a fresh adjustment of behaviors and ideas,” wrote historians Will and Ariel Durant. That statement holds true when considering the last three years.

In 2020, COVID brought immediate changes to the global society. New constructs were formed, some that met the moment and others that became the mainstays for a new way of doing business. For millions of people around the globe, the lenses through which they viewed success and happiness were refocused for life in a pandemic.

Last year, Gen Z’s attitudes toward work and their future impact as the largest working cohort showed employers that new norms had to be implemented in the workplace to attract and keep them. Gen Zers pressed forward on the need for a work–life balance, better wages, and safety in the workplace, and they made it abundantly clear that they will leave their existing jobs without hesitation to embrace new opportunities reflecting their life values.

If there is a key takeaway on Gen Z and its place in the workforce, it is that Gen Z is a generation in search of meaning. It is, according to a WeSpire study, a generation that prioritizes purpose over salary, that reads company mission statements to see if those businesses’ values match their own, that seeks authenticity, and that leaves behind toxic workplace cultures.

When looking at Gen Z’s ideas about work and life, and the impact of COVID, it’s easy to draw a straight line from their needs and their search for meaning to direct selling opportunities. There is a natural alignment of aims and purpose between the two. Moreso than other industries, direct selling meets Gen Z’s demands for the workplace and offers this youngest generation the space and flexibility to grow as entrepreneurs while supporting their efforts to make the world a better place. Direct selling can be the future for Gen Z, and Gen Z, the future of direct selling. 

  • Features
  • January 2022