The Good, Bad, and Ugly of Consignment-Work Exchange Agreements

If you sell handmade or personally designed goods, you’ve almost certainly seen the call to action posts saying that you can sell your work on consignment at a store for zero fee in exchange for working some hours. The idea is that you’ll get to keep the full amount of your sales, and it will all even out or you’ll even make a profit!

The reality of these agreements seems to be very different from the ideal some stores advertise. I polled a group of local artists to get insight into their experiences with consignment-work agreement so we can figure out what works (and doesn’t work) about this model–and some may even be using it to exploit vulnerable new artists for free labor.

Notes about the survey: This polling was done anonymously, and I did not hand-pick participants. Since most of my viewers and link-clickers are in the Portland area according to Meta location data, I’m basing my calculations off of average consignment contracts and minimum wage in Multnomah County within the metro growth boundary. This survey had 12 participants and responses were collected over 24 hours. 

How does consigning your art typically work?

When you give your products to a store for consignment, they’re usually meant to take the entire process from there. They set up your work and sell it during their retail hours, and in some lucky cases, they even list it online and ship it for you. Unlike wholesale, you don’t receive an amount up front, and all of your items still belong to you. As items sell, the business displaying your work collects the funds, and then pays you out a pre-agreed portion. The most common consignment rate is 60% of revenue for the artist and 40% for the storefront, with this 40% meant to cover operational costs like employees, utilities, and rent.

What is a consignment-work exchange agreement?

Vendors who sell in a storefront on consignment usually just drop off their work, give up 40% of their sales to the store owner in fees as items sell, and collect their 60% payout. In a typical consignment-work exchange agreement, however, a vendor will keep 100% of the funds from the sales of their products in exchange for working shifts at the store. Instead of being paid directly for the time they spend manning the storefront, all of their consignment fees are waived.

It might sound dreamy to keep that extra 40%, especially if the workload is light and you can multitask and work on your art at the same time. But according to most survey respondents, you might come to think you’re being cheated out of wages–especially if your sales numbers are low enough that the owner gets away with barely compensating you for your time. 

Let’s talk about the survey results!

In my survey, I asked anonymous participants to tell me about their experience working in a consignment-work exchange agreement. My chief goal was to find out if the amount made back in consignment fees felt financially worthwhile when exchanged for hours worked. I didn’t ask survey respondents to include what store they worked at, but many did, and two stores were named, who I will not mention explicitly in this article. My hope here is just to help makers exploring sales avenues look at the big picture of how these programs work.

I asked consignors if they were assigned an hourly wage to value the time they spent working at the store. My thought process here was that some businesses might let them know when their consignment fees equaled the value of their time worked. 0% of survey respondents reported being assigned an hourly value to their time by the store owner. This means they could only determine how much their labor was worth an hour through other means.

Unprompted, most respondents described at least one element of their required tasks at the store they sold through, which included watching the storefront, ringing up customers, or doing one task that would “benefit” the other workers such as sweeping the store. 100% of participants reported that they were required to work set shifts, and this requirement included the need to find coverage for their shift if they could not work. 

Based on my survey, the average hours worked monthly by consignors who participated in a consignment-work exchange agreement was 26 hours, with some reporting as many as 48 hours worked monthly. I asked them to look at the amount they made from their sales each month, determine what 40% of that amount would be, and divide it across their hours to determine an hourly wage they earned by consigning. 75% of participants reported their labor in the exchange being valued at $5 or less per hour. Over half of those reported $1.00 or less per hour. Survey participants who made less than $5 per hour were no more likely to express a negative opinion about consignment-work exchange than others.

One survey participant reported making $26/hr, working 10-20 hours per month, which was 5-26x higher than 83% of participants. Even with this outlier taken into account, on average consignment-work exchange employees who responded to the survey made $6.18 per hour when dividing waived fees by hours worked. 

When asked if their participation in a consignment-work exchange agreement was financially worthwhile, 75% of participants said no. Of these 75%, here are samples of the reasons they provided:

“No guarantee of being paid for the hours you worked and most of the time it wasn’t even averaging out to min wage,” said one participant who reported averaging out at $4.12/hr.

“I was not ethically okay with some other shopkeepers making little to nothing in sales but still having to be there every week and the owner essentially getting free labor,” said another participant who reported making $5/hr. 

“I was taken advantage of for pennies. My ideas for improving my sales were shot down and what I sold in store was policed while the same products were brought in through SHEIN. I didn’t even back my gas and food money from shifts each month,” said one participant who reported making $0.50/hr.

“I think there’s absolutely a fair way to do it! This particular store just seemed to use artists as free labor placeholders until they were able to afford paid employees,” said another participant who reported $5-$10/hr.

Respondents who were shown to have a more negative view of consignment-work exchange agreements primarily added notes about how it did not feel that the labor they provided equaled out to the funds they saved in consignment fees. They also talked often about their handmade work being sold alongside mass produced products.

Respondents were more likely to have a positive view of consignment-work exchange who made at least $200 in sales per month. Most respondents with positive views also, according to notes they made in their surveys, viewed their time spent working as very little time spent working for the store and more time spent engaging with their own work and hobbies. Respondents were also shown to have a more positive view of consignment-work agreement who had strong relationships with other consignors or the store owner, citing exposure and access to a creative network as good reasons to participate in the exchange. 

Here’s what those who believed this exchange to be financially beneficial had to say:

“Personally I don't make enough with my art to justify a store fee so this worked great for me personally just doing one 6 hr shift a week in exchange for no booth fee etc,” said a participant who reported consignment fees against hours worked as $1.20/hr.

“people definitely don’t always understand and want to see the worst in it but i enjoy it and find it worthwhile. i don’t consider it free labor, which is what i hear a lot, because we don’t work for the store. we have one small task (15 minutes or less) to keep the store presentable as a team but otherwise we do whatever we want during our shift,” said a participant who reported $26/hr, with 10-20 hours worked per month.

“I think the way my collective operated allowed me to access something I never would have been able to pay for regularly. It felt good to do something outside the lines of capitalism. We are shifting away from this model, with opportunities to keep doing the exchange, due to push back of “unpaid labor”. I find it very bittersweet but the exchange has also allowed the overall business to thrive which allows all of us to keep doing what we do,” said a respondent who reported $5/hr.

Is a consignment-work exchange agreement legal?

I’m not a lawyer and can’t give legal advice. I also wasn’t able to connect with a workers’ rights attorney to weigh in on this topic (but if you know one who’s down to chat, hit me up!). That being said, I did take the time to read Oregon’s public-facing interpretation about what counts as work and how compensation should be treated. You can check it out here:

https://www.oregon.gov/boli/workers/pages/paid-time.aspx

At a cursory glance and in my untrained opinion, it may not be, though I can’t say definitively. The Bureau of Labor and Industries for the state of Oregon defines hours worked on this website as time spent both actively working, waiting to work, and doing necessary opening/closing activities. “Waiting to work” time must be paid for, according to the website, unless the employee is allowed to leave the premises and return at a specific time. Many folks in the survey who sang the praises of consignment-work exchange agreements said they are able to use the time for their own business and only technically do one work task per day, such as sweeping up. That being said, they are required to stay on premises to wait to ring up customers, so in the state of Oregon, that might count as hours worked.

If you participated in a consignment-work exchange in the state of Oregon, and you’re concerned that a consignment-work exchange agreement resulted in unpaid wages or violated Oregon state law, you might be able to contact a worker’s rights attorney to see if you are owed compensation. 

My personal views on consignment-work exchange

The truth is, most consignment-work exchange agreements described by survey participants seem unethical. That’s because the system is most often heavily biased in favor of the store owner. If the average consignor works 26 hours per month like those in the survey, at $16/hr minimum wage in Multnomah County within the urban growth boundary, that equals out to about $416 a month in wages that would be paid by the store owner to each person, not including other fees/taxes the store owner can now avoid paying on the backend.

Since the majority of participants reported making less than $100/month in sales, of which the store owner would only be entitled to 40%, it means that the store owner is getting a 10x better deal on average financially than the consignor. This doesn’t include the fact that these hours correspond with hours in which the store owner can sell their own products, which would add more financial compensation in the owner’s favor.

I say this as someone who absolutely loves the barter economy. I trade studio time, classes, and pottery for tattoos, gardening work, and babysitting all the time. These types of trades only feel ethical to me when both participants clearly define the value of what they’re offering, and hold up their end of that value. I also love a collective or cooperative framework, and am more likely to offer my time as a member of a collective or coop because I know I can help define the ethics of that coop. 

You are not part of a collective if you do not have a voice in how the collective functions that equals your material participation. That means you're not just working for someone else for unclear or nonexistent pay, no worker’s rights protections, and no vote in how the business operates. Material participation includes the time that you spend working somewhere. If you’re putting hours into working at a store but you don’t get a say in how the store operates and you get pennies per hour back in compensation, you have to ask yourself: why am I giving my time to this store owner? Are they really performing a service for me–for anyone?

It is anti-capitalist to work for free or in exchange for a service, yes–when the agreement is mutually beneficial, from each as they are able, unto each according to need. What was described in these survey notes to me, with some notable exceptions, was not mutually beneficial. The most powerful member of the agreement received assistance and compensation far beyond what they offered to any other member. Many described an “artist collective” where the most financially powerful member makes their money off of stolen intellectual property and mass-produced goods they didn’t design. 

Co-ops seem to have a completely different vibe. The idea of a coop or collective is that the structure is mutually beneficial for participants, with an emphasis on fairness and communication. One responder to the survey described a coop they worked for. Since the other responses referred to a completely different business model, this felt too unique to lump in with the rest of the data. I wanted to highlight this however because I feel this person described what consignment-work exchange agreements should look like when actually operating in favor of vendors.

Here’s what they had to say:

I think they can be done well if they are mutually beneficial and don’t take advantage of artists. The gallery/coop I joined seems to have it pretty dialed and for those of us that do well sales wise and can give up 2+ days a month, it can be lucrative enough to be worth it. Outside of $$ I think key elements of a successful agreement would be a focus on trust, supporting creativity & autonomy, laying out very clear expectations and having good communication. The gallery I “work” in has a list of everything that needs to be done each day but outside of those tasks, we have freedom to spend our days as we’d like and interact with customers in a way that works for us as long as customers are being taken care of.

This participant also reported that when their waived fees were taken into account, they made $38 per hour. 

If someone wanted to participate in this kind of program more equitably, it seems like the following changes could be beneficial for store owners (though I can’t speak to whether or not they would be legal):

• Build up a record of accumulated fees and offer consignors the option to trade specific, valued hours to work off the fees, rather than asking them to work up front with an unclear financial benefit
• Make sure vendors have collective power like voting rights on store policies
• Don’t offer vendors the chance to participate in a consignment-work exchange program without giving them the data to make an informed decision, such as how much on average participants in the program get back financially per hour of labor
• Include specifics about what the fee covers to let consignors know what benefits they get from forfeiting either their time or the 40% consignor fee 
• Offer coaching to consignors to help them make the most of the agreement, remaining open to changes they would need to make in order to be able to make appropriate sales
• Make sure that consignors are curated within the store so that handmade work isn’t competing with mass-produced goods

Personally I would never participate in a standard consignment-work exchange agreement, outside of a curated coop or collective with clearly-defined policies. I think that all of the benefits of a retail artist collective can be reaped while also directly making sure that members financially benefit. We don’t have to choose between the benefits of a retail collective like getting to work on your own tasks during free time, networking with other participants, and displaying work in the shop, while also giving up a lot of money. This of course is a personal preference and should not be taken as financial advice.

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-xoxo Frankie