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Instacart CEO: Some Workers Must Earn Less For The Company To Grow

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Instacart workers are earning a lot less money after changes to the company’s pay structure — changes CEO Apoorva Mehta told BuzzFeed News are necessary for the company’s continued growth, but that hundreds of vocal Instacart shoppers say are threatening their livelihoods. According to a Buzzfeed News analysis of 15 workers’ pay stubs, shifts that once earned shoppers $100 or more in 4 to 8 hours have dropped closer to $60 to $80 for similar shifts. These shoppers estimate their earnings have fallen by around 30% so far.

When Instacart announced in September that it would be updating the way shoppers get paid, replacing its tips-based pay system with a pooled “service amount,” a company blog post described in detail how the changes would both increase driver pay and stabilize their earnings. But now, one week after the update rolled out in most markets, many shoppers who spoke with BuzzFeed News said the change has made working for Instacart non-viable.

Remington Donovan, an L.A. filmmaker, told BuzzFeed News he relied on tips to make an average hourly earning of around $25 an hour, which is twice L.A.’s minimum wage. But Instacart replaced those tips, which went directly to the individual worker delivering your groceries, with a fee that is collected by the company and distributed among all shoppers. Customers can still tip on the platform after an order is delivered, but that’s in addition to the service amount, and shoppers say the new tipping feature is hard for customers to find.

“Out of seven orders on one day, I only got two tips,” said Donovan. “My income decreased enough in just a couple days that by my assessment, it just won’t be worth it for me.”

The shoppers’ main complaint is that, although it is still possible to leave tips via Instacart’s platform, the tip feature is now hard to find, and customers, who were never explicitly told about the change, don’t realize they’re no longer leaving tips. Donovan called the move “knavish subterfuge.” Mehta says, from his perspective, “tipping is extremely, clearly, visible” in the app.

But some customers disagree. “I'm a longtime user of Instacart and I love the service, but I&039;m very frustrated. I wanted to leave a tip, but I couldn&039;t figure out how, and I work in tech!,” said Nicole Sullivan, a San Francisco based project manager. Some shoppers are taking time to explain how the new tip system works when they make deliveries, but even that might not solve their problem.“I finally found a way to add it,” Sullivan said, “but I can&039;t add a 15% tip on top of a 10% service fee on top of groceries that are more expensive than they would be in the store. It’s too expensive&033;”

While some low-earning shoppers will benefit from the pooled service amount, Mehta told BuzzFeed News that, for shoppers who were earning significantly above market rate wage, “the wages are reduced.” Indeed, paystubs shared with BuzzFeed News by more than a dozen shoppers do suggest tipping has decreased significantly since the changes rolled out.

A flyer distributed to customers by Instacart shoppers explaining how to leave a tip.

(The vast majority of shoppers who spoke with BuzzFeed News for this article asked to remain anonymous out of concern that their accounts would be deactivated for speaking with the press; Instacart said it has never deactivated workers for speaking publicly about their experience with the company.)

For example, a female driver in Denver earned around $90 on Instacart during a four and a half hour shift on a Monday in October prior to these changes; over $50 of that 100 came from tips. The following Monday, the first day the changes took place, she earned only $60 in six and a half hours, and received only 19 dollars in tips. She said if the trend continues, she’ll have to find another job.

Like many other shoppers, she believes that Instacart is intentionally allowing customers to believe that the automatic 10% “service amount” is a tip that goes directly into her pocket. “I will not continue working for Instacart at this low of pay, and while customers are being tricked into thinking they left a tip,” she said in an email. Other shoppers had similar experiences. Six of the shoppers who shared their pay stubs got no tips at all, and three more made less than $5 in tips following the change. In the week before, most of them earned around $50 in tips, with three of them earning more than $100 in tips.

Only a portion of all Instacart shoppers — those who do both shopping and delivery and are independent contractors, not the ones who work in-store and are employees — were impacted by the pay structure changes, but the group has nonetheless been notably vocal on social media and successful in building momentum around their cause. There are two active Facebook groups, each with a couple hundred members, plus an Instagram page, a popular hashtag #wheresthetipinstacart, and an anonymous open letter on Medium. The shoppers use these methods to share information about what they’re earning, as well as distribute materials like a flyer to explain what’s going on to customers. There’s even a website, Instawtf.com, where almost 1,000 people have pressed a big red button to tweet “wtf” at Instacart’s Twitter account.

These shoppers are hopeful that their combined efforts will convince Instacart to revert to a tips based system. But Mehta says that’s unlikely to happen. The purpose of changing the system, he told BuzzFeed News, was to “bring consistency to our model as we go from tens of thousands of shoppers to doubling that by the end of next year.”

The goal, Mehta said, is to have shoppers earning an average “market clearing wage” — so, in San Francisco, between $16 and $22.50 an hour. “If you are making more than that as a shopper, then your wage will go down,” said Mehta. “If you were making less, your wages will go up.” Instacart is confident that plenty of shoppers will be willing to work for the new rate, which Mehta said changes daily based on supply of workers and demand for orders in a particular market. In fact, since the new dynamic pay model started on Instacart, that base rate has already started to fall. In two Bay Area zones, for example, the new base pay rate rolled out at around $10 per trip, but was already below $9 per trip within a week, according to screenshots shared with BuzzFeed News.

As independent contractors, Instacart isn’t required to pay its full-service shoppers a particular amount — not even minimum wage. Like any free labor marketplace, Instacart only has to pay whatever it takes to keep its supply of workers steady. Even if some of the shoppers who are now earning less money quit, it doesn’t seem like that will be a problem for Instacart, at least not right away.

“We want to continue to hire, and double the fleet that we have,” said Mehta. “The way we’re going to be able to do that is to make sure it’s a great place for shoppers to earn a fair and competitive wage.”

But while it’s undoubtedly true that there are people willing to work for what one Instacart shopper on Facebook called “McDonald’s wages,” those who have been in the on-demand game a little while are concerned this move is just the beginning of a continuous crunch for Instacart shoppers, and other independent contractors who aren’t protected by employment law.

“Instacart is a great idea and a great company. It can be frustrating, but overall it&039;s been a fun job for me, part time,” Donovan said. “But I don’t think this is the right way to do business. We need to send a message to other on-demand businesses: this isn’t right.”

Quelle: <a href="Instacart CEO: Some Workers Must Earn Less For The Company To Grow“>BuzzFeed

Instacart Cancels Plans To Scrap Tips Amid Threats Of Strikes

Instacart is adjusting planned changes to its pay structure for full-service shoppers, following threats of a boycott by the independent contractors who were outraged over the $2 billion grocery delivery startup’s plans to replace tips with an optional 10% service fee collected by the company.

“After announcing this change we heard from shoppers that they liked most of the changes but wanted to retain the ability for customers to tip online,” Instacart explained in a Friday blog post. “We understand their concern and have decided to continue to accept tips.”

Instacart's move comes just two days ahead of a threatened October 16/17 strike organized around a “Let&039;s get our tips back” call to action.

Instacart had maintained that planned changes to its pay rate for independent contractors — which involved raising their base pay rate and replacing tips with an optional 10% “service amount” paid directly to Instacart — were intended to benefit workers by reducing reliance on tips.

“I get a lot of big tips. That’s what I rely on.”

But shoppers who did some back-of-the-envelope math following the company’s announcement worried that the changes would reduce their overall income. “I get a lot of big tips. That’s what I rely on,” said Matt, a shopper in Chicago who planned to boycott Instacart on Sunday and Monday. “I knew it wasn’t going to be in my best interests.”.”

Josh, a shopper on the East Coast, agreed. “Right now on an average week I make about $750, and I&039;ve made up to $1100 if I really work hard all week and things aren&039;t slow,” he told BuzzFeed News via email. “So, with the changes I’m looking at making between $500 and $700 for the same amount of work.”

As independent contractors working in different cities, Instacart shoppers don’t have a central method of communicating. But by sharing their frustration on social media —via Facebook groups, Instagram accounts and #wheresthetipinstacart on Twitter — the beginnings of a movement started to congeal. Over email, Instacart shoppers in different cities orchestrated a plan to #boycottinstacart on October 16 and 17, the day the pay changes were set to roll out, hoping to slow service on what are typically two of the company&039;s busiest days.

When a widely shared blog post critical of Instacart&039;s plan to scrap tips fueled further outrage online, Instacart published a rebuttal on its blog. But some shoppers were even more frustrated by the way that post was written, arguing it intentionally clouded the issue of just who collected the “service amount.” While it’s true that 100% of the fee does go to shoppers it won’t necessarily be given to the person doing the shopping and the delivery. Instead, the service amount is pooled and redistributed by Instacart, which is where some in-store shoppers had a problem.

“Instacart is not being fully transparent to shoppers or customers,” said Liz Temkin, a shopper in Los Angeles, who isn’t planning to participate in the boycott. “They are telling customers that the service charge goes directly to the shopper, but that&039;s not the truth. It goes into a general pot, so that Instacart can pay us a higher delivery charge. It makes no sense to pay me the same for a small order of groceries versus the same number of items from Costco. And what about my mileage & loading stuff up from the car to deliver to an office building?”

Some Instacart shoppers who spoke with BuzzFeed News said they were worried about participating in the strike for fear of being removed from the platform for “reliability issues.” Many declined to share their names fearing Instacart might deactivate their account.

But some felt taking a risk was the only way to have an impact on Instacart’s policies. “Fear is going to keep [shoppers] from doing much outside of social media and talking. What we want is action,” said Matt, who estimated as many as forty shoppers in Chicago were prepared to join the boycott. “The only thing that’s going to get us what we want is what affects customer service and profit.”

The threat of a strike has had an impact. Following Instacart’s announcement today, the changes to base fare and addition of a service amount, charged by default when customers checkout, will remain as planned. But customers will have the option to add a tip on top of that in app if they so choose.

Given the adjusted rate and new fee, it’s unclear how many customers will be willing to also add a tip. Though Instacart says 20% of customers already don’t tip at all, and 40% of tips average around $2, top shoppers say big orders or deliveries that involve heavy lifting or lots of stairs can earn them much more than that. Whether the October 16/17 strike will still occur also remains to be seen. But if shoppers have something to say about the update, it seems that — for now at least — Instacart is willing to listen.