Working for apps like Instacart is 'world of uncertainity' for its delivery drivers

The grocery delivery app's recent pay change shows how nimble contract workers need to be to make a living wage.
Published February 28
Updated March 1

Instacart helped ease Stefanie Kite back into the world.

She was in remission from breast cancer and sought a job with flexibility and low stress. She landed on the grocery app, which pays shoppers to pick up and deliver items to customers from stores such as Publix, Aldi and Costco.

"I was sick for so long, and it got me out to the land of the living," Kite said. "It helped me tremendously with my recovery. It was more than just a job."

After six months of steady work delivering groceries across Tampa Bay, the 36-year-old was abruptly seeking new work.

Instacart changed its payment structure and began applying customers’ tips to the minimum Kite was paid per order. It left her with a fraction of the money she earned before. Even when Instacart responded to national backlash from workers in February with updates to its payment algorithm, Kite said most available orders still had payouts below minimum wage.

It wasn't enough to live off — so she stopped grocery delivery altogether in favor of restaurant delivery apps like UberEats.

Such are the perils of life in the gig economy.

Kite, and the thousands of other paid shoppers on Instacart, have little recourse other than deal with a wage change or move on to the next job. Workers in America's modern gig job economy — people largely classified as independent contractors — don't have the same rights or protections as employees do under Florida and federal labor laws. The startups turned billion-dollar companies, therefore, don't have to comply with basic minimum wage and workers' compensation insurance laws for the bulk of their staffs.

"If you’re working in an occupation heavily driven by technology, an app changes, a regulation changes, it directly affects how you go about doing your work," said University of South Florida economics professor Chris Jones. "The toughest thing about being a gigger … is the fact you have to be able to accept you're living in a world of uncertainty. But with that uncertainty comes the benefits of a tremendous amount of flexibility in your life."

This new employment workplace is full of pitfalls: Uber and Lyft drivers, and couriers with Postmates and DoorDash, have all taken their respective apps to court over their contract employee status. But such cases struggle to move forward, provoke new regulations or change company practices, leaving workers to adapt or move on.

The tipping point

Kite's journey into app jobs came shortly after she entered remission about a year ago. She began with the ride-sharing app that started it all: Uber. But she didn't feel safe picking up strangers, so she shifted to food delivery.

It got her out of the house and walking around supermarket aisles across Sarasota, St. Petersburg and Bradenton. She enjoyed being a kind face during deliveries to elderly clients unable to grocery shop for themselves. Kite pulled in $500 to $700 a week, working hours similar to a full-time job. At the time, Kite was making base pay of $3 per order plus a 40-cent commission per item. She pocketed any tips.

By November, Instacart couriers across the country noticed a drop in wages even as their number of orders stayed consistent. From her home in Sarasota, Kite saw her earnings fall to nearly half what she once earned. Instacart workers in Washington state began to compare orders and payouts and determined Instacart was using tips to subsidize their pay. They organized with the group Working Washington and wrote an open letter and petition in mid-January outlining their grievances. It's been signed by more than 3,500 people.

Instacart CEO Apoorva Mehta responded two weeks later with his own letter apologizing. He announced the payment structure would change once again and tip money would remain untouched. Workers would get checks for tips that had been diverted. Base pay per order would be at least $7, but people making deliveries would not get a commission for each item ordered.

[The options keep growing. Who does grocery delivery best, Amazon Prime Now, Instacart, Walmart or Shipt?]

Using tips to contribute to wages is legal, regulated by the same law that allows restaurants to pay waitresses less than minimum wage because they typically receive gratuities.

But Instacart's move garnered major pushback, even from customers. USF marketing professor Mark Bender said research shows most people feel strongly that their tips should go to service workers, not their employers.

"If a consumer's perspective becomes, 'my tip is not going to the individual," he said, "they might be less inclined to tip."

Instacart eventually returned $245 in tips to Kite. But when she looked at orders available to her under the updated payment system, she said several came in at $7 with no tip. If a driver rejects too many orders in an attempt to avoid low payouts, Instacart makes it more difficult for them to pick up delivery shifts in the future.

But by Kite's count, taking a $7 order means making well under minimum wage.

A flexible workforce

Kite stopped taking Instacart jobs in mid-February, shifting to restaurant delivery services DoorDash and UberEats. DoorDash applies tips toward base pay, but Kite said with the ability to take more than one restaurant order an hour, she's back to her original earnings.

It's common for giggers to work for more than one app simultaneously — even ones in direct competition with each other. Instacart is far from the only grocery delivery game in town: Whole Foods’ service with Amazon's Prime Now, Shipt and Walmart all offer grocery delivery in Tampa Bay. And they all largely rely on contract workers.

"Businesses like an independent contract model because it gives them a flexible workforce," said Tampa labor attorney Luis "Tony" Cabassa. "They also don't have to pay Social Security and (federal insurance taxes) to the government like you would for an employee."

Companies are able to minimize risk by pushing it on to their contract workers. Kite said she twisted her ankle once while grocery shopping. Instacart didn't foot the hospital bill, much like Uber doesn’t pay for car wear and tear.

Gig workers who have tried to bring employers to court over their contract employee status struggle, said Cabassa. Most apps require workers to sign arbitration agreements, which mandate that disputes be mediated privately. The most effective way to push change, then, is for contract workers to ban together and speak out, hoping to sway public opinion.

In his statements since the tip dispute, Mehta has thanked his contract workers for their feedback and said it's the company's "responsibility to change course quickly when we realize we’re on the wrong path."

The new normal

Tim Armstrong of Clearwater is a casual Instacart user, relying on small orders to supplement his regular Publix trips. He's noticed recent orders taking slightly longer than they did before January. He used to see the Instacart website promote orders within an hour. Lately, it's been within two.

He chatted with his last courier, a man named Kenneth, who said he's less likely to take big orders since the pay structure changed.

"Kenneth has been my only repeat courier in the last 10 or so deliveries, so I’m seeing turnaround," Armstrong said.

When Kite opened the Instacart employee app this past week, she noticed delivery shifts still available that had previously been claimed quickly. She took that as an indication that fewer drivers are working. She suspects she and her husband, a fellow delivery driver, are far from the only ones switching gigs.

It's all cyclical. No app's pay structure will stay consistent and consumer demand can change dramatically, said Bender, the marketing professor. Shoppers are savvy enough to check which apps have the best deals for the same type of services, meaning a successful worker has to be just as nimble.

In 2017, "#DeleteUber" was trending on social media. Amazon was under heat in Florida last year because two of its app's "Flex" drivers walked inside a Sarasota customer's home. But controversies aren't going to turn companies off to relying on gig workers, who so successfully minimize their overhead costs and keep them competitive.

"I don't see this as a new phenomenon," said Jones, the economics professor. "It's a shifting of the labor market, a progression occurring over an extended period of time, and I don't see it changing anytime soon."

He even considers himself a gigger. In addition to teaching, he does independent contracting on the side as an economic consultant.

Kite still enjoys the flexibility that gigs give her. In her past life, she worked in a high-stress corporate office in Chicago: She managed independent contractors.

Contact Sara DiNatale at [email protected] Follow @sara_dinatale.

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