20 Apr Half of Instacart’s drivers earn less than minimum wage, labor group claims
As gig-based unicorns go public this year, they are haunted by protests from contract workers claiming that pay is deteriorating as startups groom financials for investors. Grocery-delivery startup Instacart–a pre-IPO company valued at close to $8 billion–has been in the spotlight since introducing a new pay model in late 2018.
Working Washington, a labor advocacy nonprofit in Washington State, has targeted Instacart as part of what has grown into a nationwide protest and nascent movement called Pay Up, aimed at changing the entire app-based gig economy. The goal: Ensure pay of at least $15 per hour–not counting tips, and after subtracting expenses like gas and the extra payroll taxes independent contractors pay. (Gig work companies like Instacart typically pay per assignment, not per hour.)
Despite its recent promises to improve worker pay, Instacart is falling far short, Working Washington claims in a new report, hitting an average of $7.66/hour. That’s based on analyzing a combination of fees for over 900 individual assignments offered to drivers, known as “shoppers,” and about 500 weekly pay reports Instacart provides its contractors. Instacart—which said in February that it would start to provide workers guaranteed minimum payments up to $10—disputes several aspects of Working Washington’s pay calculations, which I’ll get to in a bit.
Furthermore, Working Washington claims that half of assignments, and half of workers overall, are paid less than the federal minimum wage of $7.25/hour. Pay for contract workers is not governed by federal, state, or local minimum-wage laws.
However, Working Washington concedes that 6% of its workers earn over $15 per hour. “Some set of people in some markets can figure out ways to maximize their pay,” says Working Washington spokesperson Sage Wilson.
It is difficult to say exactly–or even approximately–what gig workers earn. In February, Fast Company analyzed Instacart assignment rates using a pay calculator developed by Working Washington, and found a range that worked out to $2.74 to $29.05 per hour.
There is plenty of room to debate these figures. While Instacart does have a per-mile component to its pay formula, it’s meant as compensation for the work that driving entails, not as expense reimbursement, the company tells me. (Its rate of 60¢ per mile is close to the IRS allowance of 58 cents per mile for calculating work expenses.)
Also, Working Washington estimates pay from the time the shopper accepts an assignment on the app and heads to a store to purchase items for a customer. Instacart only calculates miles from the store to the customer, not other components of the worker’s trip.
Instacart claims that shoppers earn “a premium” over minimum wage in whatever area they work–including state and local minimums that are much higher than the federal rate. But that figure includes tips, which Working Washington says should be excluded. (The federal minimum wage for tipped workers is $2.13 per hour.)
Instacart also critiques the size of Working Washington’s data samples, citing the larger pool of 70,000 people that do gig work for the company.
Wilson, of Working Washington, acknowledges the limits of the data.
“Obviously the set of people reporting data to Working Washington is not a random subset of Instacart drivers,” he says. But, he adds, “I feel confident [based] on the scale of the sample that it’s not far off. And if Instacart wants to share their data on that, we can compare notes. I would love to do that.”
Source: Fast Company