Instacart’s Downward Spiral
Despite increased public awareness of worker pay issues and the minimum wage, Instacart continues to slash wages and as of today, is paying its workers rates as low as $3/hour. This is made possible by introducing a purposefully confusing and unpredictable pay structure, which is the company’s latest tactic in exploiting its workers. This comes on the heels of years of incrementally decreasing pay — and even stealing workers’ tips. But you might never know it reading the news, because the company has kicked off a PR campaign to celebrate a new, massive valuation.
For those who haven’t heard of it, Instacart is a company and an app that allows customers to place an order at nearby supermarkets, where it will be assigned to a worker to either shop and deliver or just deliver an order to the customer. Tens of thousands of workers around the country rely on this as a primary source of income.
Instacart exists in an unusually beneficial spot within the market; one where upfront business costs have been paid for by venture capital, and where lagging regulations allow them to pay its primary workers — classified as contractors — almost nothing. Indeed, this wealth of cash on one side and lack of expense on the other means their bread is being buttered from both sides. While Uber and some others are finally getting their deserved scrutiny, very few tech publications have thought to read between the lines and discover why this company has such a massive valuation at all.
Until recently, Instacart workers would receive a known base payment amount for each order, and small increases for the number of items in the order, bumps for orders of especially large dollar amounts, as well as the occasional long-distance delivery bonus. Customers also have the option of leaving their worker a tip. Instacart was never the best gig in the so-called “app economy,” but for many shoppers and drivers the work was steady and rewarding enough to keep going, and in turn become a primary source of income. But repeated cuts in pay have strained the relationship.
In September 2018, Apoorva Mehta, admitted to Recode that his company needed to treat their workers “much, much better” and added that shoppers are a core focus for his company. The good feelings from this mea culpa lasted less than two weeks before company again announced that a new, drastically lower pay schedule would be launching nationally.
The new pay structure is particularly damaging to those who have been loyal to Instacart and rely on it to make a living. There is no longer a base payment per order — simply, the worker is presented with the general details of an order (a summary of items, distance to the customer, and estimated pay) and given the option to confirm or decline. An order that will take an hour and might have paid a worker a minimum of $10 before tip could now offer as low as $3 — or even less — after tip. And that’s before even mentioning the fact that workers bring their own cars and pay for their own gas and insurance. In many cases, workers will be losing money to accept orders.
It is likely that the shopper’s confirmation page is a tactic to shield the company from criticism — there is almost certainly a PR statement already waiting in the wings saying something to the effect of, “If they don’t want the order, they don’t have to take it,” which is technically true. However, when this happens over and over, and as time ticks away and shoppers at some point have to pay their bills, they’ll effectively be forced to take some of them. They’re banking on the idea that readers, customers, and investors won’t think that far ahead.
Over the next several months, Instacart is likely to bleed away its most reliable shoppers. Many of the private Facebook communities of shoppers are trading information about their new pay amounts and sharing tips on how to find better gigs. But not everyone will be so fortunate as to land something else, because for many workers and their families, Apoorva Metha’s pay cuts represent a significant blow to their livelihoods.
Even if you’re not an Instacart customer, if you live in a supported city you’ve probably seen shoppers whizzing around grocery stores. Feel free to say hi and ask us how we like it. Ask if our pay is enough to live off of. Even in wealthy areas, and even in the high-end grocery stores, we’ll tell you no, we won’t be able to survive doing this forever. And as soon as the PR dies down and the media goes home, it will become obvious that Instacart, eventually, won’t be able to survive it either.
