E-Commerce & Food Delivery Jobs Growing During Recession

Growth In E-Commerce And Food Delivery Jobs

Technology has facilitated the accelerated growth of e-commerce and food delivery jobs during the COVID-19 pandemic, but these jobs often suffer from low wages and limited access to legal rights and benefits, according to a new report released today by the UC Berkeley Labor Center and Working Partnerships USA.

While many industries have struggled under the pandemic-induced economic recession, and some workers fear new waves of technology-related job loss, opportunities for work in e-commerce and food delivery have expanded significantly in the past year. The report found that certain jobs, such as cashiers, may be threatened by technologies like self-checkout and online ordering, but that many other occupations in the industry are growing.

"Customers are now paying for tasks that they used to do themselves for free," said Chris Benner, professor at UC Santa Cruz and lead author of the report. "This creates new jobs doing things like fulfilling orders, preparing food in grocery stores, providing curb-side pick-up, delivering groceries and prepared foods, and creating the technologies that make online ordering possible."

E-commerce and food delivery had been growing prior to the pandemic, but has expanded significantly in the past year, as customers have shifted to online shopping for food in order to limit their risk of exposure to disease. Online food orders in the U.S. have increased from 2% of grocery sales before the pandemic to a predicted 10% by the end of the year. According to a recent survey, as many as 45% of all households—55.5 million—ordered groceries online for delivery or pickup during the preceding month.

Food Delivery Services Overtake Ride Sharing

Companies have taken note of this change, and moved quickly to offer expanded food delivery services. Uber reported that food delivery now makes up a larger portion of its business than ride-hailing, and in July the company acquired the food delivery start-up Postmates for $2.65 billion. Lyft announced in late November that it will begin offering services related to online food orders as well. Takeout delivery company DoorDash, last valued at $16 billion, filed to go public this year after beating expected earnings.

The growth in food delivery has provided an important source of income for workers during a time when unemployment has skyrocketed, but many of these jobs offer little in the way of stability, compensation, or even the protection of basic rights. Food delivery workers and app-based shoppers are often hired as independent contractors, meaning they are denied access to the basic legal protections of employees, including the right to a minimum wage, protection from discrimination and harassment, and the ability to form a union.

Traditional grocery employees typically are paid above minimum wages (receiving $15 per hour on average in the US) and have higher rates of unionization (15%) when compared to retail workers overall, but these conditions will be threatened by the growth of low-quality, independent contractor jobs in e-commerce and food delivery.

"The pandemic has emphasized just how essential grocery and food delivery workers are," said Ken Jacobs, chair of the U.C. Berkeley Labor Center. "This report shows how the growth of gig work in online ordering and delivery may put their job quality at risk."

Proposition 22 Passage

The passage of Proposition 22 in California exacerbates these challenges. Prop 22 circumvents existing California legislation expanding access to employment rights, ensuring the continued use of independent contractors by app-based delivery and ride-hailing companies. These companies spent over $200 million to secure their victory in the campaign, and swiftly announced their intent to expand the policy to other states.

"The rapid increase in food delivery and e-commerce jobs makes it even more important that the people doing this work have decent pay, critical benefits like healthcare and unemployment, and the freedom to join together in unions," said Derecka Mehrens, executive director of Working Partnerships USA. "The passage of Proposition 22 is a blow to these workers, and cements in law a permanent underclass of mostly Black and Brown people who are denied the basic rights everyone should expect at work. We must make sure this damaging approach doesn't spread to other states, and keep fighting to raise the quality of these jobs."

The report is part of a broader multi-industry research project led by the UC Berkeley Labor Center and Working Partnerships USA, which examines the impact of new technologies on work. The project is supported by the Ford Foundation, the W.K. Kellogg Foundation, and the Open Society Foundations.