Some Instacart workers to strike over pay that can be as low as $1 per hour | Ars Technica
Until Fall 2016, the Instacart app gave customers a default option to tip, all of which went entirely to the shopper. Then, as the company began to rapidly expand nationwide and began to provide limited-time guaranteed earnings for debut shoppers in new cities, Instacart switched to a default "10 percent" service fee model. In other words, some of the service fee collected in Chicago might end up effectively subsidizing the pay of a new shopper in Detroit.
While tipping is still an option, frustrated shoppers like Telles say that customers often find it confusing as it requires multiple non-obvious steps. Plus, he wondered, why would most people tip if they’re already being charged a "service fee"—words that suggest an effective tip anyway.
"Before my tips were stolen I worked 38 to 40 hours a week and I made $1,200 a week," Telles said. "I have now had to pare my hours down to the days where I make the most traffic, Sunday and Monday. I work 20 to 25 hours and I make about $300 or $250."
Instacart said that customers have the option of paying the default service fee or removing it, in addition to tipping (or not), or any such combination. Some shoppers have taken to individually showing their customers how to remove the fee ("Do you want to know how to save 10 percent?") and pay their shopper directly via tip instead.
"Workers needed to earn less in order for Instacart to grow," the Bay Area Instacart shopper said. "The service fee is what totally fucked us all up."
When the combination of commission, per-item fee, and service fee and/or tips are all put together, the result is that some Instacart shoppers say they are often making very low take-home pay. That amount is even lower when gas, car wear-and-tear, insurance, and other required expenses are factored in. (The Internal Revenue Service suggests that it costs $0.535 per mile to drive a car in 2017, including gas and vehicle maintenance.)
"I’ve never been at a company where the harder you work, the more they take away," Sheena Layne, a shopper based in San Jose, CA, told Ars.
She said that when she began working in 2015, she could make about $1,000 for 30 hours of work. Now she has to work nearly double time, "driving and shopping faster."
Layne estimated that in two years of work, she’s put an additional 100,000 miles on her car.
"I don’t know anybody who thinks it’s ok to pay somebody five dollars and ask them to deliver 40 cases of water," she added.
Images of delivery take-home pay amounts posted to the Instacart shoppers’ Facebook group show recent instances where workers are sometimes making less than minimum wage for several hours of work. One woman showed $16.95 for seven hours of work in Jackson, Mississippi. Another said she was paid $13.30 for a three-hour job in St. Louis, Missouri. Yet another woman posted a screenshot for $2.80 after doing a two-hour pickup and delivery in Austin, Texas.
"Our theory is that most people, when you factor in cost, are making well below minimum wage," Nate D’Anna told Ars. He’s the CEO of a new company called Dumpling, which aims to provide analytics and wage transparency to various gig economy services.
D’Anna himself recently tried being an Instacart shopper for three hours, during which he said he too delivered "cases of water" to Adobe headquarters in San Francisco and was forced to double park his car on a crowded street to make the delivery promptly.
An anonymous Las Vegas shopper recently told Dumpling that she was effectively ordered to load and deliver 600 pounds of sugar and cooking oil—and injured herself in the process. She said she wasn’t treated well by the company’s customer service system and was issued a "Reliability Incident"—Instacart’s equivalent of a penalty—which can ultimately result in being permanently booted from the service.
Avoiding a legal showdown
According to the $4.6 million settlement signed earlier this year, Instacart is still facing 50 ongoing arbitration proceedings, a private quasi-legal process that doesn’t allow for class-action lawsuits and generally favors corporations over individuals. Some of the other lawsuits have been ordered to private arbitration, under the terms of the employment agreement.
"The proposed settlement is still a pittance compared to what the case may have garnered if a class had been certified," Veena Dubal, a labor law professor at the University of California, Hastings, in San Francisco, e-mailed Ars. "However, it’s hard to know whether it is ‘unfair' because I’m unsure what they would have received in individual arbitration. The numbers are certainly very low."
Miriam Cherry, a labor law professor at Saint Louis University, told Ars that the fact that Instacart is still facing so many arbitration proceedings suggests that the legal pressure is not relenting—the workers’ lawyers may be trying to call Instacart’s bluff.
"You’re going to have to defend 50 of these," she said. "Paying for an arbitrator is not cheap. And paying your lawyer to show up for all of these, that’s not cheap. At that point they’re saying they would rather go back to court."
Plus, even after all of this litigation and arbitration, the underlying issue remains unresolved industry-wide: is it proper for these thousands of shoppers to be classified as contractors, rather than employees?
"There will be continued friction between the company and its workers if these issues are left festering instead of trying to solve them in a productive fashion," Byron Goldstein, an Oakland-based attorney who has filed lawsuits on behalf of gig economy workers in the past, e-mailed Ars.
For its part, Instacart said that through its variable pricing, it’s targeting a nationwide average take home pay of around $14 per hour plus tips. The United States federal minimum wage is currently $7.25, but Massachusetts and Washington have a minimum wage of $11 per hour—California is $10.50 statewide, while some cities (including Oakland) are set to reach $15 by 2018. Instacart has not made any data showing how often it actually achieves that goal of an effective $14 hourly wage publicly available.
Roughly half of Instacart shoppers and delivery workers are independent contractors, rather than employees. Part-time employees, who stay in-store to "pick" items, have their hours capped at 29 hours, and Instacart does not pay their health care costs.
"I have always felt that this job is well worth it for the amount of money made based off of the work required," Bradley Egan, the in-store Houston shopper and part-time employee who makes $20 per hour, e-mailed Ars. "I mean come on. I literally grocery shop for other people all day in an air-conditioned store and get paid more per hour than any other job I have had in the past (umpire, construction and landscaping, pizza delivery, teacher's assistant, management positions)."
Still, at least as far as this weekend is concerned, Instacart isn’t worried that the looming strike will make any noticeable impact on its service. Plus, even if thousands of shoppers do end up striking, will anyone even notice? Or put another way, with the picket lines being entirely digital, the message may entirely be lost on most customers.
After all, at least in the San Francisco Bay Area, a message on D’Anna’s shopper app indicated that on November 19 and 20, in the run-up to Thanksgiving, Instacart doesn’t anticipate high volume shopping days anyway.
"How are people going to connect that they have a longer wait with the fact that a tip is missing?" Cherry said.