After pulling 12-hour shifts as a restaurant hostess, Alid Alvarado was eager for a job that would allow her to spend more time with her three young kids. She found it as a shopper with Instacart, the on-demand grocery delivery service, which allowed her to set her own schedule and earn some $300 a week for 20 hours of work.
But two weeks after she became a shopper — a job that entails getting customers’ groceries from store shelves to their homes — Instacart changed its payment structure and, Alvarado said, her earnings plunged.
Those 20 hours yielded less than $160 as she waited for higher-paying orders to come through, embittering her to the gig economy job that at first seemed like a lifeline.
“We’re being mistreated,” said Alvarado, 28, a single mom who lives in south suburban Oak Lawn.
Instacart, which boasts a community of 70,000 shoppers across the U.S. and Canada, has attracted $1.6 billion in funding since its founding in 2012 as investors anticipate a surge in consumers ordering their groceries online. Its CEO recently said an initial public offering is “on the horizon.”
But the San Francisco-based company for years has angered some shoppers who say numerous tweaks to the payment model have resulted in pay cuts, prompting them to boycott and attempt to organize the loose network of independent contractors.
Instacart has acknowledged the frustrations and over the last six months has “deepened our commitment to improving the experience” of shoppers by “carefully and deliberately testing every new feature with shopper focus groups in cities of all sizes to gather their feedback along the way,” the company said in a statement.
But the company’s shoppers are pushing back against a recent change to the payment model.
Instacart announced in October that by the end of the year all shoppers will be paid according to a new formula meant to better match shoppers’ earnings to the time and difficulty of each order, by factoring in details like the weight of items purchased. But aggrieved workers say the result has been inconsistent earnings and an increase in orders that pay too little to be worth their time.
Since the new system rolled out in the Chicago market Nov. 5, some local shoppers have been boycotting low-paying orders, in hopes that if enough workers decline to take them the company will be forced to pay more. Leaders of the resistance are preparing form letters for shoppers to send to their state attorneys general and members of Congress asking them to take a deeper look at the potential exploitation of independent contractors, who lack labor protections like minimum wage thresholds and unionization rights.
“The gig companies need to be held accountable to the people who built their businesses,” said Matthew Telles, a shopper in Des Plaines and a chief agitator in the fight for better pay from Instacart. Telles, one of 10 organizers leading the boycotts and letter campaigns nationally, estimates that anywhere from 1,000 to 15,000 shoppers are actively participating in the boycott — he has no way of measuring for sure — and is confident the numbers are growing as more are engaged through social media and word of mouth.
Instacart says its operations have not been affected by the boycott, which is taking place in markets across the U.S., including “no meaningful impact on delayed customer orders.”
The new features, intended to make shoppers’ jobs easier, were formulated in consultation with shoppers, the company said. Shoppers’ average hourly earnings have remained consistent as the changes roll out in more markets.
“We want to be clear that every shopper and every order matters to us, and we take all feedback seriously,” the company said in a statement. “We’re committed to looking into every issue that our shoppers raise to better understand how we can improve our features and create the best possible shopper experience,” the statement continued.
Telles doesn’t buy that and accuses the fast-growing company of investing less in its workers than in algorithms that he thinks calculate the lowest payment shoppers might be willing to take.
“We fund the growth and get nothing for it,” Telles said. “We don’t get equity; we don’t get stock. We get a sore (butt) and broken suspension in our cars.”
The pushback at Instacart comes as drivers for ride-hailing platforms celebrate a milestone win in New York, where city officials last week approved a $17.22 minimum wage for Uber, Lyft, Juno and Via drivers, who are also independent contractors. Driver battles to be reclassified as employees have failed.
The labor strife that has accompanied the rise of online gig platforms has prompted some scholars to advocate for a new category of “independent worker” that would get some protections currently reserved for traditional employees, such as the right to unionize and collectively bargain, though such proposals have not moved forward formally.
The Bureau of Labor Statistics surprised many economists earlier this year when it issued a report finding independent contracting has declined in the U.S. over the past 13 years, upending predictions that precarious work arrangements are on the rise. But it found a 50 percent jump in independent contractors in the transportation sector, likely because of online platforms.
“I think we need to be concerned about this category of worker because it’s going to be more widespread,” said Stephanie Fortado, a lecturer in the School of Labor and Employment Relations at the at the University of Illinois at Urbana-Champaign. If sluggish wage growth can’t keep up with the cost of living, more people may turn to gig work to supplement their income, she said.
The workforces of online gig platforms are growing rapidly even as they remain a tiny fraction of the overall labor market. The share of U.S. families who in a given month received income from online transportation platforms, which include ride-share and delivery services, rose to 1 percent this year, doubling from two years ago, according to a September report from the JPMorgan Chase Institute on the online gig economy.
Yet average monthly earnings for transportation gig workers fell by 53 percent between 2013 and 2017, according to the report. It isn’t clear if that’s due to a decline in pay or in hours, but given that the drop occurred as the labor market strengthened, “it wouldn’t be surprising to me if engagement on these platforms is more tenuous than it was,” said Fiona Greig, director of consumer research at the JPMorgan Chase Institute.
Telles, 35, became an Instacart shopper in 2015 after he took a golf ball to the head and suffered a brain injury, making it difficult to return to his job in sales. He said he earned $30 an hour in those early days of Instacart, when customers would regularly tip 18 percent and the company paid by a predictable formula: A base fee per order plus 40 cents per item and bonuses for long trips or large orders.
Telles said he saw his pay decline as the years went by and Instacart reduced the base fee, added service charges that confused customers and changed the tipping function on the app. He was a named plaintiff in a class-action lawsuit, settled by Instacart last year for $4.6 million, alleging misclassification of shoppers as independent contractors as well as other labor violations. The company did not admit wrongdoing.
The recent payment model change does away with the per-item fee and fixed base pay and instead tells shoppers how much they will earn based on a formula that takes into account the time, mileage and effort it takes to shop for and deliver a particular order.
Some of the changes are positive, shoppers say, including the ability to see the items before accepting the order, so they’re not stuck carrying cases of water if they don’t want to. Shoppers also now get a $3 bonus per order if the customer gives them the highest rating.
But in a private Facebook group for Chicago-area shoppers, which has nearly 1,200 members, some shoppers have been sharing screenshots of orders they say would have paid much more under the previous model. Some pay so little, they say, that profits are negated given the cost of gas, car maintenance and taxes.
Jerome Leahy, 38, who has been shopping for Instacart for five years, has a screenshot of a Costco order that entailed delivering 501 cans of soup for a payment of $20.88. The same order under the previous system would have paid close to $75 if the customer gave a 5 percent tip, he said.
“I used to work 40 hours a week, and now I have to work 60 hours or more to make the same amount of money,” said Leahy, who lives in Chicago’s East Garfield Park neighborhood. He pulled up his payment history on the app, which showed earnings of $778.98 for one week last fall, and $348.09 for the same week this year during which he said he worked the same number of hours.
Some days are worse than others.
Alvarado, the single mom of three who lives in Oak Lawn, said the worst was when she accepted three Costco orders that together paid less than $20 and included multiple cases of soda and boxes of copy paper that she had to deliver to a downtown building that had no dolly. She hurt her shoulder and couldn’t work the following day. Also, the business she delivered to didn’t tip, which she has found is common among corporate customers.
But she still has lucrative days.
Alvarado likes to start her shift in the parking lot of the massive Whole Foods Market on Chicago’s Near North Side, where Instacart orders are plentiful, watching her app as she sits in her Kia Sorrento. The job is ideal for her, she said, as she likes to shop — driving for a ride-share platform like Uber would make her too anxious — and it can hold her over while she waits for her GED program to start in January. She hopes to study criminal justice and become a youth parole officer.
Alvarado rejected one low-paying order that fit the boycott parameters, but then accepted a series of small orders of just over $10 a piece, which she said were worthwhile because she could do them quickly.
As she delivered six bags of groceries to a customer’s home in Roscoe Village, under a dusting of snow flurries, she glanced around the tony neighborhood.
“It motivates me to see the houses where I could possibly live in the future,” she said.
Her next order came immediately, and soon Alvarado was pushing a cart through the aisles at Fresh Thyme Farmers Market on North Elston Avenue in the Logan Square community area. She examined Honeycrisp apples for bruises, took a photo of a bag of baby carrots to prove she got the right one, waited at the seafood counter for 4 pounds of black pepper salmon, and sent a message to her customer asking if it would be OK for her to substitute a different brand unsweetened almond milk.
The timer on her Instacart app showed she was done shopping in just over 15 minutes, beating the 16-minute estimate it had given her (there is no consequence for taking longer). After driving the two bags to her customer, she observed that it has been interesting to glimpse what Instacart customers eat.
“There are lots of vegan people and organic people, who pay a lot for their groceries but don’t leave good tips,” she said.
Tipping is a sore spot for some shoppers, who say the 5 percent default on the Instacart app has conditioned customers to give only that. (They can change it to what they want.) And under the new payment system it seems tips are being rolled into base compensation. One screenshot shows a $12.54 total payment for two orders from Costco — $10.67 of it made up of tip.
The mystery behind the algorithm’s calculations has been one of the most frustrating parts of the recent changes because it makes them hard to dispute, shoppers say.
“It’s a black box; no one can figure it out,” said Shelley, 68, a Chicago shopper who asked that her last name not be used for fear of being deactivated by the platform.
Shelley, a life coach who started shopping for Instacart two years ago to help make ends meet, drives to the North Shore to make deliveries. She used to accept 100 percent of orders, but since the recent change, she takes just 45 percent of them, as the pay for some is “insulting,” she said. Her weekly earnings have dropped from between $350 and $400 for 35 hours of work to $200 to $300 – and on her worst weeks she’s averaging $5 an hour.
“I wake up with panic attacks every day; I start getting scared and adding up my bills for the week,” said Shelley, who said she lost her savings in a prior failed business venture.
Shelley hopes Instacart improves the pay because she likes the work. She gets to see different parts of town, and lifting bags has kept her in shape.
“Most women my age, their arms wobble like wings,” she said. “I have good triceps. It’s definitely a perk.”
aelejalderuiz@chicagotribune.com
Twitter @alexiaer
