DELIVERING INSECURITY: E-commerce and the Future of Work in Food Retail December 9, 2020 Chris Benner and Sarah Mason with Françoise Carré and Chris Tilly A report from the UC Berkeley Labor Center and Working Partnerships USA WORKING PARTNERSHIPS USA 1 Acknowledgments We’d like to thank the numerous people who gave their time and shared insights with us, both in formal interviews and informal conversations, during the research for this report. We thank the National Retail Federation, ShopTalk, Home Delivery World, and Groceryshop for enabling us to attend their conferences. Great thanks to Annette Bernhardt and Jessie HF Hammerling for guidance and feedback, and to the reviewers of this report. This research was commissioned by the UC Berkeley Center for Labor Research and Education and Working Partnerships USA, and is part of a larger, multi-industry project generously supported by the Ford Foundation, the W.K. Kellogg Foundation, and the Open Society Foundations. About the Authors Chris Benner, Ph.D., is the Dorothy E. Everett Chair in Global Information and Social Entrepre- neurship, and a professor of environmental studies and sociology at the University of California, Santa Cruz. He currently directs the Everett Program for Technology and Social Change and the Santa Cruz Institute for Social Transformation. His research examines the relationships between technological change, regional development, and the structure of economic opportunity, focusing on regional labor markets, and the transformation of work and employment. He has authored or co-authored six books (most recently Equity, Growth and Community, UC Press, 2015) and more than 70 journal articles, chapters, and research reports. He received his Ph.D. in city and regional planning from the University of California, Berkeley. Sarah Mason is a Ph.D. student in sociology at the University of California, Santa Cruz. Her research explores automation, labor process, and technical control in app-based work. She is currently engaged in a multiyear ethnography, working as both a Lyft driver and DoorDasher. Her work has appeared in Logic Magazine, the Guardian, and the New Left Review. Françoise Carré, Ph.D., is the research director for the Center for Social Policy at the University of Massachusetts Boston J.W. McCormack Graduate School of Policy and Global Studies. Chris Tilly, Ph.D., is professor of urban planning at the University of California, Los Angeles. Suggested Citation Benner, Chris, and Sarah Mason, with Françoise Carré and Chris Tilly. 2020. Delivering Insecurity: E-commerce and the Future of Work in Food Retail. Berkeley: UC Berkeley Labor Center and Working Partnerships USA, https://laborcenter.berkeley.edu/delivering-insecurity/. Delivering Insecurity: E-commerce and the Future of Work in Food Retail 2 Contents Executive Summary .....................................................................................................................................4 SECTION ONE: Introduction ..................................................................................................................... 12 Research Questions and Methodology .................................................................................................................13 SECTION TWO: Background on the Grocery Industry ........................................................................... 15 Occupations in Grocery Stores.................................................................................................................................17 SECTION THREE: E-commerce and New Business Processes ............................................................. 21 Online Ordering of Groceries ...................................................................................................................................24 Fulfillment .....................................................................................................................................................................32 Food to Customers ......................................................................................................................................................38 New Prepared and Semi-Prepared Food Delivery Options .............................................................................42 SECTION FOUR: Overall Implications for Work and Employment ..................................................... 46 New Jobs ........................................................................................................................................................................46 Existing Grocery Store Jobs ......................................................................................................................................56 SECTION FIVE: Conclusions: Future of New Food Delivery and Implications for Grocery Stores 59 Barriers to Technological Change ..........................................................................................................................60 Technological Change Leading to Job Growth and Linking with Existing Stores, Not Replacing Them ..................................................................................................................................................61 Job Quality is a Major Concern ................................................................................................................................61 Business Strategies and Public Policies Can Make a Difference in Improving Job Quality ...................62 APPENDIX: List of Interviews ................................................................................................................. 65 Endnotes ...................................................................................................................................................... 68 Delivering Insecurity: E-commerce and the Future of Work in Food Retail 3 Executive Summary Since the start of the coronavirus pandemic, millions of Americans have ordered groceries online for the first time. By some estimates, as many as 45% of all households—55.5 million—ordered groceries online for delivery or pickup during August.1 Major grocery chains have seen their total revenue from online orders double or even triple from last year. Some surveys show as much as 25% of U.S. grocery sales were ordered digitally during the widespread lock-down period in May, and still nearly 12% in August.2 Many customers, understandably nervous about the health implications of leaving their homes and sharing narrow grocery aisles with other shoppers, are exploring new ways of getting food to their homes. This not only has led to the surge in online grocery ordering, but also provided a stimulus to the struggling meal kit industry and expanded home delivery of prepared foods. For elderly customers and those with vulnerable health conditions, the expansion of these new food ordering and delivery channels literally is a lifeline in the context of the pandemic. The growth of e-commerce sales for food has increased the number of jobs available at a time when unemployment across the U.S. economy has skyrocketed. Grocery workers now are seen as essential workers, even heroes. At times they even have received extra hazard pay. And yet media reports also are full of stories of ongoing low wages and poor working conditions, severe health risks, and employer retaliation against workers who speak out. These challenges are even greater for grocery and delivery workers hired as independent contractors, who have no legal employment protections, unstable earnings and hours, low levels of access to health insurance, challenges obtaining personal protective equipment, and legal and administrative barriers to accessing unemployment insurance should they not be able to work. What are the broader implications of the recent surge in grocery e-commerce work? Will these jobs continue to expand beyond the pandemic and, if so, by how much? What kinds of wages and working conditions exist in different segments of the industry? What changes should people in more traditional grocery store jobs anticipate? As grocery e-commerce continues to grow, what options exist to improve working conditions for the workers affected by this trend? Delivering Insecurity: E-commerce and the Future of Work in Food Retail 4 Executive Summary Key Findings “The future is already here—it’s just not very evenly distributed,” says science fiction author William Gibson. While the pandemic has provided a catalyst to the growth of online food ordering, it is simply accelerating trends that already were apparent in the industry before, but just not as widely distributed. In this report, we examine these longer-term, technology-en- abled shifts in business processes in the grocery industry, looking both at trends before the coronavirus pandemic and the most recent shifts, to assess the implications for future changes in work. Our conclusions can be summarized thusly: • Technological change is leading to new job growth. In contrast to the widely held belief that new technologies inevitably lead to automation and displacement of workers, in this case the growth of e-commerce actually is leading to the creation of new jobs, as customers now are paying for tasks they used to do themselves for free. This includes: Fulfilling orders, both in grocery stores and fulfillment centers, for both groceries and ◦ meal kits. Preparing food in grocery stores, as grocery stores respond to increased demand for ◦ semi-prepared foods. Providing