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The rise of the gig economy spells the end for these workers: 'We're the vestiges of the old system'

By Levi Sumagaysay

Workers are increasingly losing jobs to the gig economy

Kevin Savage is 50 years old, has already lost two jobs to the gig economy and expects to lose a third sometime soon.

Savage was a limousine driver in Las Vegas, but then Uber Technologies Inc. (UBER) came along and destroyed that business. So he became a delivery driver for grocery chain Safeway, but his store in Vegas switched to DoorDash Inc. (DASH) for deliveries.

"I'm a very negative person when it comes to third-party and gig companies," he said. "They've taken me out of two gigs."

After moving to Silicon Valley to keep delivering groceries for Safeway, Savage sees the end of that job on the horizon as well. Savage and his colleagues fear Albertsons Cos. (ACI), the owner of Safeway, will switch over to third-party delivery exclusively. With Albertsons' recent announcement of an expansion of its partnership with DoorDash -- more than 2,000 of its stores nationwide will be using the on-demand platform for grocery delivery -- they expect to eventually lose their jobs.

Online-grocery delivery has had a rocky history since its introduction in the late 1980s and early 1990s, including the high-profile flameout of internet-only grocery store Webvan during the dot-com bust. After that and similar attempts failed, grocery stores like Safeway and Albertsons built up their own delivery services, complete with unionized employee drivers. Those who still drive for Safeway's delivery service use company-owned trucks and make as much as $25 an hour.

But things have changed again with the rise of the gig economy, a business model that depends on independent contractors and can relieve grocery stores of costs associated with running their own delivery operations. Walmart Inc. (WMT)and Kroger Co. (KR), the nation's largest grocers ahead of Albertsons, rely heavily on third-party delivery platforms like DoorDash, Instacart, Shipt and more -- although Kroger this year opened its own fulfillment centers where orders are filled with the help of automation and delivered by its own employees. Walmart's own delivery platform, Spark, treats drivers as independent contractors. And Whole Foods, which is owned by Inc. (AMZN), uses independent-contractor delivery drivers, too.

"We're the vestiges of the old system they have in place," said Chris Chavez, a driver who works for Safeway in Redwood City, Calif. "They'd prefer to outsource the work. They don't have to pay wages and healthcare benefits. They don't have to manage fleets of vehicles."

A spokesman for United Food & Commercial Workers in the San Francisco Bay Area said there are now barely a handful of U.S. markets where Albertsons-owned stores still directly employ delivery drivers: the Bay Area, Portland, Seattle and Chicago.

"We're battling Safeway, which is trying to replace drivers with DoorDash," said Jim Araby, spokesman for UFCW 5. Though the Bay Area contract doesn't expire until 2024, Araby said Albertsons is reducing workers' hours and the ZIP codes to which they can deliver.

A spokesman for Albertsons would not comment on the number of remaining markets where the company is still using its own delivery drivers. On whether the company is reducing driver employees' work hours and delivery routes, he would say only that the drivers remain under contract.

Late last year, Albertsons discontinued using its own delivery trucks and drivers and shifted to third-party deliveries in Southern California, saying it was a strategic decision. A company spokesman said some of the employees who lost their jobs driving delivery trucks found other positions in the company with similar compensation, though he would not share how many.

"We were pleased some associates chose to stay with the company and work in our warehouse or retail operations," he said.

See: Albertsons, Vons shifting to third-party delivery in California, elsewhere (link)

Instacart -- a pioneer and leader in using gig workers for grocery delivery with 67% market share in the space, according to Edison Trends -- is also another option for more than 90% of the company's customers, the company spokesman said.

"Grocery stores have notoriously thin margins," said Bill Pearce, assistant dean and chief marketing officer for the Haas School of Business at UC Berkeley. "For them, using other people's money -- like DoorDash's -- is more appealing."

Chavez and other Safeway delivery drivers say the company will save money as it shifts to third-party delivery, but the brand could suffer a hit. The workers who are replacing Safeway drivers may not care as much about cultivating relationships with customers, or whether the deliveries are intact, they said.

Customers will "be subject to the will of the independent contractor who delivers their orders," said Chris Wagner, a Silicon Valley-based delivery driver for Safeway who says he used to deliver to 10 ZIP codes but now delivers to five.

He and other drivers do not blame DoorDash drivers, who they say are under pressure to earn as much money as they can by maximizing the number of deliveries they make. But they say that can lead to customer complaints, some of which can be found on Yelp Inc. (YELP), Safeway's websites and elsewhere.

Wagner said he recently had to make a delivery to a customer who had complained that she didn't receive her order. The first driver put the delivery outside her front gate, not where she wanted it -- outside her front door, because it's hard for her to walk farther than that. The groceries, which Wagner said were worth $200, were ruined after sitting outside overnight.

"I've been at Safeway for 20 years," he said. "My uncle worked for Safeway for 40-plus years stocking shelves at midnight. He retired with a pension... now to see [jobs being lost] to a gig service... this is the saddest I've ever been."

A DoorDash spokeswoman said the company offers an around-the-clock support team to take care of issues. "As it relates to Albertsons deliveries facilitated by Dashers, we have not seen a rise in poor delivery ratings or experiences from our customers," she said.

Bobby Rispler, a union representative and organizer for UFCW Local 162 in Portland, represents nearly five dozen delivery workers in his area. He said he's constantly "in fear" of the gig economy.

"It's an existential threat to workers, to careers, to retirement, to jobs with reasonable wages and healthcare," he said, adding that it's important to organize and support legislation to fight its expansion.

"Nothing against Dashers, but they're working for a stop," he said. "Safeway drivers are working for a career."

For Savage, it may be time to move on to a different career. He has started bartending. He used to average about 36 hours a week making deliveries, he said. Now, he says he is down to about 24 hours a week, about the same number of hours he is now spending bartending. He's also thinking about returning to radio, another of his previous jobs.

"I live by the motto: Have fun, make money," he said. "This whole Safeway thing is not fun anymore, it's becoming sad. Am I going to walk into having a route or having nothing? Time to rediscover what else I want to do."

-Levi Sumagaysay; 415-439-6400;


(END) Dow Jones Newswires

07-17-21 1046ET

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