With unemployment low, grocery delivery services fight to retain workers
- With unemployment low across the country, companies that rely on short-term labor such as Instacart and Postmates are having trouble finding and holding on to employees, according to the Wall Street Journal.
- To attract workers, many gig-economy companies are offering perks, signing bonuses and other enticements. Instacart will soon offer reduced-price mobile phone plans for its workers and invite them to company town hall meetings. Food delivery startup DoorDash, meanwhile, offers health insurance plans and has begun leasing motorized bicycles to delivery workers.
- Economists estimate there are around 1.5 million workers currently in the gig economy, though that number could fall if the labor market continues to improve.
Many gig-economy companies started during the recession, when static wages and high unemployment meant workers were easy to find. Now that the economy has improved, with unemployment hovering just above 4%, these companies are having a hard time convincing people to do the piecemeal work they offer.
According to a recent report from the JPMorgan Chase & Co. Institute, more than half of workers in the gig economy quit within one year. Some of these workers are college students or other transitional workers — and companies like Instacart can certainly expect turnover — but the high attrition rate reflects the harsher realities of gig work, including low pay, long hours and lack of benefits. In 2015, Uber conducted an internal audit that found 44% of its drivers quit within their first year, according to The Wall Street Journal.
For grocery e-commerce services like Instacart and Shipt, which are rapidly expanding across the country, this comes at a particularly tough time. To attract and retain shoppers, Instacart works to make them feel like an integral part of the company by inviting them to regular meetings, sharing updates and putting them in touch with company leaders. The company also has made its tipping procedures more transparent after a change in policy prompted workers to file a lawsuit.
Postmates, meanwhile, offers a signing bonus of anywhere from $50 to $500 for new workers, while Shipt advertises free membership and industry-leading wages for potential shoppers.
Overall, on-demand work is a tricky balance for employers who want to offer an attractive working environment but without treating short-term workers too much like full employees, which can land companies in legal trouble. Sources interviewed by the Journal say that referring employees to health insurance plans and offering discounts on work-related devices such as mobile phones and car accessories can keep things legally in-bounds.
Low unemployment rates also have impacted grocers, which rely on part-time workers. To combat this, companies like Walmart and Kroger have raised wages and contributed more to their benefit funds. Kroger recently contributed $1 billion to its employee benefits fund — a contribution made for tax purposes, but also to stay competitive in a tight labor market. Moves like this are tough in a low-margin industry, but smart retailers, like gig-economy companies, realize their business is driven by people.
- The Wall Street Journal In a Job Market This Good, Who Needs to Work in the Gig Economy?
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