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Why stores are hiring gig workers.

ORIGINAL SOURCE: NBC NEWS

 

The explosion in popularity of ride sharing and food delivery apps means that gig work, or contract work, has become a much more common form of employment across the country. But the mass exodus of workers from the retail industry over the course of the pandemic means many companies are now also hiring gig workers for in-house tasks like stocking shelves, assembling displays and packing online orders.

“Grocers and retailers in general are definitely looking at it now more than ever for in-store over the last couple years,” said Marco Di Marino, director of retail and grocery with consulting firm AlixPartners. “They’re looking at these platforms not really as a labor replacement but as a way to scale up and down that otherwise in the current condition would be very difficult.”

They’re looking at these platforms as a way to scale up and down that otherwise in the current condition would be very difficult.

From Midwest grocery chain Meijer to discount retailer Big Lots, stores are buzzing with gig workers, a contingent of independent contractors who do short-term work for multiple companies. Walmart uses third-party vendors and gig workers “as a complement” to its existing workforce, spokesperson Anne Hatfield told NBC News. Fedex offers flexible schedule options, including the ability for workers to pick up extra shifts when it’s convenient, the company said in a December earnings call.

Fedex CFO ​​Michael Lenz told investors the company is “aggressively” addressing labor shortages through flexible employment that is “not as binary as full-time, part-time. The scheduling flexibility helps as well in terms of navigating labor availability when and where you need it,” he said.

Contract work has exploded, said Stan Zylowski, CEO of retail execution and workforce management platform Movista. “Inside any major retailer today, meaning food, drug, mass retailer or home centers, there is gig work being executed fairly continually.”

The coronavirus pandemic dramatically shifted labor dynamics. Last year’s economy tilted in favor of workers as people left jobs that were high stress and low pay, leaving service companies desperate for help. The leisure and hospitality industry lost 1.2 million jobs since February 2020 and the retail industry lost 158,000 workers during the same time, according to the Bureau of Labor Statistics.

Some retailers raised their offerings to stanch the outflow of staff, with Target, Sam’s Club and Under Armour raising their minimum wages to $15 an hour and other retailers offering enhanced benefits such as tuition coverage.

“As soon as it became impossible to ignore these problems because the labor force shrunk, we’ve seen a great proliferation in sharing of jobs and a willingness from companies to partner with other entities simply because there is less labor,” Zylowski said. “The demand that we’re seeing for outsourced work, meaning gig work, is easily 10 times what it was pre-Covid across household-name companies.”

Dave Dempsey, CEO of gig work app Hyer, told NBC News that since the company launched in 2019 it has grown to include more than 200,000 gig workers across 22 states with 55 companies searching for labor. Anywhere between 65 and 70 percent of jobs are within the retail industry, he said.

As coronavirus variants spread among retail and grocery workers, Dempsey said employers are more desperate for on-demand workers. Over the first weeks of January, businesses across the country closed early or temporarily shut down because so many of its workers tested positive for the virus or were exposed and quarantined.

“As demand goes up, you can hire more workers and then when it goes down, you can scale down,” he said. “People are using [the app] now to fill the gaps.”

Hyer operates much like Uber or DoorDash, said Dempsey. Someone looking for gig work downloads the app, completes a background check and profile and enters their banking information to receive direct deposits. Then they receive notifications about nearby jobs. Companies may receive a handful of interested workers in the job and select the worker they want to hire. Hyer receives a commission from the advertising company for each job.

“This is here to stay,” Dempsey said. “It gives a lot more flexibility to match demand in the business.”

Alan Martin, vice president of retail and customer experience with the clothing company Faherty, told NBC News the company hired 54 gig workers over the busy holiday season through an on-demand labor startup called Reflex. Now, it has at least two Reflex gig workers a week to work four-to-six hour shifts where they steam clothes or refresh shelves in its Austin, Texas, store.

“We do have a lean team, so if someone calls out because of Covid or an unexpected situation we can utilize something,” Martin said.

Reflex workers have previous retail experience and are looking for additional work or a more flexible schedule, said Reflex CEO Mike Meyers. He declined to disclose the average pay for a worker, but it is higher than what partnering store associates are paid. Retailers pay Reflex a commission per hour its workers work.

“It is more expensive than what we’d pay a normal associate, but that is the reality because it is temp and on demand staffing,” Martin said. “But I do feel this is going to be a little bit of a norm in the future.”

Well before the pandemic, retailers had been using some form of on-demand or short term labor, said Mike Brady, the owner of the staffing service company Express Employment Professionals. One of his clients, the last mile delivery company Lasership, uses a dozen gig workers for its local Jacksonville, Florida, operations to deliver prepared meal kits between 3:30 a.m. and 7:30 a.m., he said. Workers can select up to three days of work a week to deliver meal kits and can call out the night before if they are unable to make the shift.

“Companies are a lot more flexible than they used to be,” said Brady. “They’re thinking, ‘What can we do to accommodate someone who is in school until 1 and can work 2 to 7? It’s not a full eight-hour shift, but let’s see if we can work with them.’”

Some companies such as Target have brought the gig worker concept in-house. Last year the company rolled out On Demand employment as an option for existing Target team members who may be full-time students, retirees or have other scheduling needs. Workers are only required to pick up one shift every six months to retain their employment status and receive in-store discounts. More than 30,000 team members are now on demand workers and Target expects its popularity to continue, said Jill Lewis, a spokesperson for Target.

A 19-year old Target worker in Bradley, Illinois, who asked to remain anonymous because she is not permitted to speak to the media, told NBC News she became an on-demand worker to give her time to focus on college. She had been working at a Texas Roadhouse but tips dried up last year as people avoided eating in restaurants. Since then, she has worked exclusively as an on-demand worker for Target.

“It’s nice for now,” she said. “If I know I have an exam, I just don’t work for a few days that week.”

As an on-demand worker, she loses her ability to earn paid vacation time. But she recommends it for people who need flexibility or may be considering another job or career.

“It’s not like I’m forced to do [a shift],” she said. “If I didn’t want to work in the morning one day I could pick up a night shift. And, if I get in a money crunch I can work at a Target. I do like that aspect.”

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