Passive income is no easy way to earn, tips of ‘finfluencers’ may boomerang

While many critics have correctly pointed out the false promises that permeate the financial wisdom within these online subcultures, we must carefully consider the cultural and economic forces underwriting this shift

A growing cohort of TikTok influencers has begun building platforms by promoting passive income to their followers. Thousands of users regularly share their expertise, tips and advice on how their followers can, theoretically, achieve the same level of passive income without lifting a finger.

One influencer claimed to have tried “about every side hustle that exists” before landing on print-on-demand as the most profitable source of passive income, which she says makes her “six figures as a teenager.”

There is no denying that interest in passive income surged during the Covid-19 pandemic,. The passive income subreddit has nearly half a million members and the #passiveincome hashtag on TikTok has 1.2 million posts and billions of views. But, since the near end of the pandemic, many have lost faith in the labour market, believing it to have reached a point of no return. Given the current state of the economy and governmental policy, it's not surprising that so many are lured by the appeal of passive income. The middle and working classes have seen the same opportunities afforded to their parents and grandparents evaporate, leaving them dreaming of financial stability without the means to achieve it. Amid unprecedented levels of income inequality, there is a growing recognition among workers of the uncertainty of the labour market and the need to think differently about financial security. But passive income might not be all it's cracked up to be.

Earning while you sleep: According to a 2022 survey, a significant portion of Gen Z gets financial advice from either TikTok (34 per cent) or YouTube (33 per cent). They see influencers sharing their successes (and very rarely their failures) and are motivated to try their strategies out for themselves. Various passive income subcultures have emerged, from finance hustle gurus to young women peddling money-making credit card schemes to their followers.

Many influencers pushing passive income schemes describe it as a way to “earn while you sleep,” suggesting that once you put in the initial work on a certain generating enterprise, it will essentially make money for you.

The research that I conducted with sociologist Karen Gregory showed that this has been further literalised by livestreamers on platforms like Twitch. These streamers draw in more viewers and attention by livestreaming themselves sleeping, as fans donate money, promote their content and buy emojis or other perks throughout the broadcast. This signals a desire to be “freed from work,” because “to sleep on stream is to put aside and obscure the preparatory work that goes into it and benefit from the market through complete bodily passivity.”

For us, these sleep streamers seem to embody the logical endpoint of passive income as the ultimate dream of this moment under digital capitalism.

Always be grinding: The idea of passive income is often glamorised, but the reality is that many of these ventures require significant effort. In many cases, the work that goes into side hustles or alternative income streams is incredibly laborious, from handling the logistics and costs of dropshipping (the purchasing of cheap goods to re-sell them at a profit) to the creation and selling of online courses about making passive income. Indeed, the understanding of what passive income is has transformed wildly, from what the Internal Revenue Service describes as “activities in which you don't materially participate” to re-appropriating terms like “leveraged income” to refer to maintaining Airbnb rental properties as being somehow passive. While many critics have correctly pointed out the false promises that permeate the financial wisdom within these online subcultures, we must carefully consider the cultural and economic forces underwriting this shift.

Some of it is surely good old-fashioned aspirational content and marketing, as journalist Rebecca Jennings wrote in a March 2023 article for Vox. “In short,” she wrote, “it's the feeling that our primary aim as people is to make our lives as effective and efficient as possible.”

In other words, the “always be grinding” mindset. As a result, the concept of participating in multiple income streams to protect one's self from financial vulnerability is re-framed as not only strategic but passive. Sure, you can break up your labour into different entrepreneurial paths, but you can also, ideally, start them up and then let them go without much maintenance. Let the money flow.

A new gilded age?: Get-rich-quick schemes are nothing new, and the ones currently being shared by “finfluencers” are typically rife with pitfalls, from a complete lack of regulation or accountability, to blurring lines between regular social media content and advertisements — not to mention the way users are expected to take influencers at their word for how much they make through passive income. Only 20 per cent of Americans make passive income, almost entirely via dividends, interest or rental properties. Canadian numbers are harder to come by, but Finance Canada estimated 83 per cent of taxable passive income was held by individuals in the top one per cent income range in 2017. This makes sense.

The classic Wall Street notion of passive income — investing in the right stocks or index funds or owning property and having the rental checks prop up your livelihood — persists. Nevertheless, in a new gilded age defined and structured by wealth that is passively inherited or transferred and rarely distributed, the rest of us can't help but take notice of a platform economy waiting to be exploited — and why not? The belief that one's self worth is their net worth turns us all into enterprising would-be success stories, grabbing at a way to monetize what we can, while we can.

For many, this means racing to seize opportunities before they vanish.

(The writer is associated with Concordia University)