The Dallas Morning News
‘Don’t game my paycheck’
Delivery workers feel at mercy of algorithms
When Ulysses Galves began working for Instacart last year, he easily made $700 a week ferrying groceries from supermarkets. He averaged about $18 an hour, and qualified for bonuses — an extra $200, say, for making 40 deliveries in a week.
But within months, that began to change. Then it changed again. Now the 47yearold Iraq War veteran from Silverdale, Wash., says he’s lucky to pull down $400 a week for the same 40 hours of work. He also used to be guaranteed at least $10 an hour, he adds, but that’s no longer the case.
“The changes are subtle — they’re small steps, so you kind of accept them,” said Galves, who also delivers for Postmates to make ends meet. “You lose a little money here and there — and after a while you realize you’re making half of what you used to.”
The nation’s largest retailers are jostling to win over customers through their groceries, fueling explosive growth for delivery services such as Postmates, DoorDash, Instacart and Fresh Direct, which are reporting surging sales and attracting hundreds of millions of dollars in venture capital.
Walmart and Costco have invested heavily in grocery delivery in recent years, as has Target, which acquired Shipt in 2017 for $550 million as part of its push into the arena. Amazon upped the ante recently by expanding free grocery delivery for millions of its Prime members.
But filling and delivering grocery orders is laborintensive and costly, and drivers for many thirdparty platforms say they are being wrung out in ways that ultimately result in lower pay and less transparency about how their wages are calculated. Their pay is typically structured on an automated maze of moving parts, including order size, driver availability and driving distance. But with one tweak of an algorithm, companies can effectively change wages for hundreds of thousands of contract workers, who are not guaranteed an hourly minimum or other employee protections.
“These companies got established, they got good workers, and now they’re following a classic business playbook: squeezing workers as a firstline approach to making profits,” said Erin Hatton, a professor at the University at Buffalo who studies labor issues. “This technology, which could easily be used to increase transparency, is actually being used to do the opposite.”
More than 10% of Americans rely on gig work for their primary income, according to data from the Bureau of Labor Statistics, and experts expect that figure will only grow. But labor analysts say the proliferation of appbased platforms such as Uber, Postmates and Instacart has given tech companies unprecedented power to change how workers are paid.
‘On their own’
Experts who study the gig economy say they expect pay rates to inch lower in coming months, as companies such as DoorDash and Instacart take steps to go public. And, they say, they fear that any pullback in consumer spending could also have an outsize effect on their pay — grocery delivery and takeout orders are easy targets if costs need to be reined in.
“These workers are very much on their own,” said Alexandrea Ravenelle, a sociology professor at the University of North Carolina at Chapel Hill and the author of Hustle and Gig: Struggling and Surviving in the Sharing Economy. “All of the power in the gig economy is held by the platforms. Workers are constantly being rated and ranked, and are competing against each other for pay.”
That “gameification” of gig work — offering sporadic bonuses for delivering a certain number of orders, for example — allows companies to keep workers on their toes without committing to higher pay long term, she said. And the opaque nature of algorithmheavy platforms, she said, means companies can make incremental changes without raising red flags. “It’s not even like they have to change an hourly rate across the board,” Ravenelle said. “There is no hourly rate.”
In interviews, Postmates workers said they are making 30% less than they once did after the company changed its algorithms and eliminated a $4perjob guarantee in May. A spokeswoman for the company said it “remains committed” to allowing its workers to “cumulatively earn even more in a given hour.” Workers in Washington, D.C., she said, make an hourly average of $18 in pay and tips.
DoorDash, which uses contract workers to deliver food for Pizza Hut and Chili’s, recently made headlines for using customers’ tips to offset workers’ wages. After widespread outrage from workers and customers, chief executive Tony Xu said the company would begin giving workers their tips.
“After a year of research and conversations with thousands of Dashers, we built a pay model to prioritize transparency, consistency of earnings, and to ensure all customers get their food as fast as possible,” Xu wrote in a series of tweets this summer. “But it’s clear from recent feedback that we didn’t strike the right balance.”
Instacart, which paid $4.6 million to resolve similar complaints in 2017, is facing a classaction lawsuit that accuses it of “intentionally and maliciously” using workers’ tips to pay their wages. A spokeswoman for the company declined to comment.
Instacart has made two sweeping changes to its earnings structure since October 2018, which company executives say are aimed at increasing transparency and consistency for its 130,000 contract workers. Most workers shop, bag and deliver orders, although some handle only deliveries.
Delivery workers used to be paid a flat 40 cents per item, with bonuses sprinkled in. Last October, Instacart began calculating pay based on a number of factors, including product weight and driving distance from the store to the customer. In February, after complaints that it was not properly passing on customer tips, the company began showing drivers how much of their pay was coming from tips. Workers can now see how much they’ll be paid before they accept an order.
Instacart also guarantees drivers at least $5 per delivery, although drivers say a single order can sometimes take them more than two hours to complete, depending on distance and traffic. Fullservice workers, meanwhile, are guaranteed at least $7 per order to shop, check out and deliver items.
Drivers also receive 60 cents per mile between the store and the customer. Workers are not paid for the amount of time it takes them to drive to the supermarket, which they say can sometimes be 20 or 30 miles away.
There is a growing movement to reclassify gig workers as employees, which would ensure that they receive a minimum wage as well as certain benefits and legal protections. California passed legislation last month that makes it harder for companies to classify gig workers as contractors. Uber, Lyft and DoorDash are spending millions to fight that law.
Although demand is growing, grocery delivery is still a small sliver of the market. Online grocery ordering makes up about 2.5% of the overall grocery market, although that figure is expected to more than double to 7% by 2023, according to data from MetLife Investment Management.
Corwin Samuelson, 58, has been delivering groceries for five years, first for Instacart and then for Shipt. “Gamified” bonuses, he said, have become a growing reality: Deliver 15 orders in two days, receive $200, perhaps, or 50 orders in a week for $700.
A spokeswoman for Shipt said that pay varies, depending on location, store and order, and that the company has “evolved our pay structure” to account for factors such as traffic and shopping time.
Although those bonuses can be substantial, Samuelson says they give him little control over how much money he takes home each week, even if he keeps consistent hours. Those large swings in weekly pay, he said, can also make it difficult to secure an apartment or estimate the taxes he owes. He has been living in Seattlearea hotels and Airbnbs for the past three months because he says he cannot afford a security deposit for an apartment.
“Just pay us,” he said. “Don’t game my paycheck, don’t mess with our livelihoods. We’re under enough pressure already without feeling like, ‘Oh no, if I don’t make some number, I can’t pay my rent.’ ”
“All of the power in the gig economy is held by the platforms. Workers are constantly being rated and ranked, and are competing against each other for pay.”
Alexandrea Ravenelle, sociology professor at the University of North Carolina at Chapel Hill