Half of Instacart’s drivers earn less than minimum wage, labor group claims
fastcompany.comI believe these services will fail if employment laws are ever strengthened, or held up more rigorously.
The 'not so dirty secret' of the American economy is that it 'depends' (i.e. in it's current form) on tons of cheating, illegal migrant labour, de-fact sub-minimum wage, skimping on health benefits etc. etc..
It's 'sustainable' only to the extent that some workers, particularly undocumented - are willing and able to take the crap for the opportunity for a new life. Which is only slightly fair (fair to the extent that were a foreign workers regime legalized, conditions would be ballpark where they are now, and it would legally be 'legit' and there'd be plenty of workers).
But in socialized countries, I just don't see it working, the numbers don't add up.
I see these services working in NY/SF/LA and 'parts' of Chicago, maybe Ft. Lauderdale, Boston i.e. wealthier areas - the rest - no way, at market wages. London of course, maybe Paris. Though probably most of Asia.
I just don't see this as mathematically viable in Scandinavian countries, or Canada, or most of the US.
The end-game will require more efficiency in delivery, for example like some kind of better pickup arrangements for buildings, maybe ownership by the grocery companies so there's fewer entities trying to take money from the pie, possibly some kind of 'weekly delivery/sign up' for longer term engagement etc..
> maybe ownership by the grocery companies
Big retailers deliver groceries in many countries already. In some places it's been the case for over 15 years! It's not rocket science really.
The main reason this hasn’t become bigger in the US is because of the sprawling, inefficient layout of most US residential areas; unless you are doing major volume on the order of FedEx or UPS you are probably wasting tons of miles getting to customers in isolated cul-de-sacs.
All of these gig economy companies seem pretty fragile, they are all risky investments. Most of them are only one court decision or legislation from being put into a difficult position.
Instacart was straight up stealing tips until they were caught: https://www.theverge.com/platform/amp/2019/2/6/18214335/inst...
I wouldn't listen to anything they have to say on the matter of pay. They have zero credibility.
I quit using instacart and ended my subscription after this. It was seeming like a promising alternative to using a car to shop, but I'll just continue working on that in other ways.
I was outraged when I found out about this and made this clear to their support. They didn't even respond.
Switched to Prime Now and have never looked back:
- Has an actual consistent service level, I've had some crazy Instacart people here in Arizona.
- The tip has a default value, pre-calculated based on your order.
- No more orders where half of my items get cancelled as out of stock.
Damn, I didn't know about the tipping schenanigans. However, it's weird how different my Instacart experiences are from yours. In Seattle everyone has been top notch, friendly, and like crazy helpful. I've been using it for, I dunno, a year? And I still get free shipping + waived delivery fees when I order. I have no idea how they make any money.
I've tried Prime in the past, but I'm not in the demographic they cater too. Whole Foods isn't my scene, and while I'm not too cheap to have something delivered, I am too cheap to pay $2.30 for an organic onion.
Oh, that doesn't surprise me at all. Instacart is fine service-quality-wise in SF/NYC/Seattle areas. It's just in any other major city in the US they seem to suck quite badly..
Also Amazon cut the prices on everything at Whole Foods by like 50% a few months after buying them. I completely agree their prices before (and still on non-whole-foods brand items) are crazy.
Everything I get from Prime Now is roughly the same price as my local grocery store, and I don't buy organic junk or anything.
Ah, perhaps I should give that a shot. I'm in the Bay Area, so I assume most of the options are on the table, and I'm happy enough with Amazon's other prime services...
You do realize Amazon does the same thing?
Hard facts on the differences between Instacart and Prime Now here in central Arizona right now as a consumer:
Let's pretend both of these services screw over the driver, which one are you going to order from?| Prime Now | Instacart | |------------------------------------------|------------------------------------------| | 2-4h Delivery | 5-6h Delivery | | $5 mandatory fees | $10 mandatory fees | | $5 tip suggested | $2 tip suggested | | Extremely rare to not get what I ordered | Every order _at least_ 2 items cancelled | | Consistent service level, professionals | Inconsistent service, literal kids helping parents deliver my groceries WTF |Now let's compare them from the perspective of working for them:
Which one of these would you sign up to work for?| Prime Now | Instacart | |-----------------------------------------------|-----------------------------------------------------| | Accept 2-4hr work window on demand | Accept individual orders on demand | | Guaranteed hourly wage $18 (good for Phoenix) | Paid per order only. $11/hr is reported average. | | Tips contribute to base wage | "Tips are now totally separate" after public outcry | | Almost always work windows available | Lack of orders makes most shoppers also Uber/Lyft |I get it -- service jobs suck, and putting tips towards base wage is stupid. But to say that both of these companies are doing the same thing is like saying "because you can't leave, prison in the U.S. and Norway are the same".
Outside major California cities and perhaps NY, Instacart _sucks_, badly, and does everything in its power to fuck over the employees that literally are operating its business.
To play devil's advocate for a moment: most wait staff are paid primarily with tips, unless they don't meet minimum wage, in which case the employer makes up the difference.
This is functionally equivalent to the situation at Instacart.
Tipping is a really bad practice that we should end, rather than defend.
Devil's advocate? Places that take the tips from the wait staff and pocket them are operating illegally.
While they cannot pocket the tips, they can legally subtract the tips from the employee's hourly wage, even if that means going under the "minimum wage", which essentially amounts to the same thing as pocketing.
See https://www.dol.gov/whd/regs/compliance/whdfs15.htm
N.b. The employer is unable to do this if they don't know about the tip, which is why, as I understand it, tipping in cash is preferred by folks working in the service industry.
That’s not the reason. Cash tipping is preferred so they don’t have to pay tax on it.
I hate their tip-stealing practice but I wish there'd been more concrete details of methodology for this. Car expenses are all tax deductable and yes paying 15.3% off the top in SSE employment taxes is a hit but it seems like these estimates may underestimate by a few dollars an hour. Not that that's saying much of course, it's still low. I just like hard data in these narrative-driven pieces.
A minimum wage job is not that hard to get if you own a car so I'm curious how long these people are working at less than minimum wage before they find another opportunity. Maybe these people are only working a few hours a week to make a few extra bucks?
I think it's as simple as them not doing the math. Self employment taxes, gas, vehicle wear, etc. They just see the check is bigger than what their prior minimum wage job was. Probably true for Uber, Lyft, etc, also.
And, to be fair, it's more flexible, as you say. I suspect some drag their kids along, or work for Instacart after their day job (or other obligations) is done, etc.
It's not even necessarily the case of not doing the math. Assuming the check is bigger, it's not even wholly irrational for those short of cash for immediate obligations to take the bigger check today and kick future costs around car maintenance down the road.
I've kicked expenses down the road more times than I care to admit.
Sometimes it’s the only debt that’s accessible to someone (borrowing from their future self).
People aren’t that stupid, they just don’t want to work for a boss or have to be somewhere on time and deal with customers and whatnot, at least with the meager additional wages they would get.
Actually, because of Instacart and uber and amazon delivery, those retail/hotel/restaurants have to offer decent wages to attract people that are actually willing to do the work.
As are all the "sharing economy" scams out there. They all hide the costs in the math and pass them on to their employees. Uber, airbnb, etc.
They aren't scams. They are just opportunities of low compensation. A scam is where someone is robbing you blind because they lie to you. A crappy "job" doesn't have to be a scam to be crappy.
Many of these "gig economy" companies have grossly misrepresented the earning potential[1]. That bit is scammy. As is stealing tips, which Instacart was caught doing.
[1] One example: https://www.recode.net/2017/1/19/14330042/uber-20-million-se...
They lie in the sense that they take advantage of the fact that some people do not have the education or intelligence to think about things like asset depreciation, making them absorb these costs without being fully aware of the implications.
Pass them on to their employees, and also society as a whole.
Socializing the costs, privatizing the profits.
I would like to highlight and submit the paradox at the heart of the gig economy. At one end, the gig economy relies on a critical mass of consumers willing to pay for additional value on top in the form of convenience and real-time demand networks, but at the same time the economic model also leads to a race to the bottom as it assumes and necessitates that every request is served with the least amount of friction possible (capital, labor or otherwise). Which creates a problem, if the future of work is an expansion of the economic trends behind the gig economy (cost reductions by passing the buck onto the employees and highly dynamic workforces), then that logically means the number of people who have the capability to afford it in the first place also decreases as the buying power of the populace decreases.
We are trapped in a strange loop. The excess buying power of consumers that has arisen from capitalism has also led the same system to incentivize services and practices that are reducing the buying power of consumers.
Our old way of looking at things in isolated subsets will bring us to ruin. We really should adopt a new perspective and a new way of doing things where we view our economies as ecosystems or networks might clarify why these changes are occurring (the gig economy is far from the only change that's happening). For example, we can look at excessive economic inequality and understand why it is bad by looking at natural ecosystems and how they are a closed loop.
For e.g. Consumers are like plankton. They are the injection of biomass (money) into the system that ensures money changes hands when they buy goods and services. A single entity, no matter how rich, cannot provide equivalent mass to the greater ecosystem than a large set of consumers. Or, in other words, a billionaire requires only so many pairs of sunglasses and Netflix subscriptions. Ergo, a broad base of wealth where people can afford the products around them is essential for a capitalistic ecosystem to function, as these plankton keep feeding entities higher up in the food chain through an accumulation effect.
For whatever reason, just like we have decimated our natural environment, we have also decimated our economic ecosystem. The number of entities with high purchasing power is rapidly decreasing, and this signals a significant problem for the future of the ecosystem. And it also suggests how automation can end up eating itself economically unless we institute measures - artificial or otherwise - that inject capital back into the building blocks of the economy.
I suspect that as computing gets better, we will eventually create models that will make the invisible transparent and make our debates about these topics quaint to people of this future. Maybe what we need more than just lobbying instacart is systems that allow us to see economies in real-time and simulate outcomes of individual, highly variable, irrational agents at unprecedented scales in order to give policymakers definitive answers about issues like this, for we are governing blind and I am afraid of what the future holds for us.
> I suspect that as computing gets better, we will eventually create models that will make the invisible transparent and make our debates about these topics quaint to people of this future. Maybe what we need more than just lobbying instacart is systems that allow us to see economies in real-time and simulate outcomes of individual, highly variable, irrational agents at unprecedented scales in order to give policymakers definitive answers about issues like this, for we are governing blind and I am afraid of what the future holds for us.
We already have the compute power, just almost no interest in economic modeling besides ERPs. There are great projects such as ValueFlows ( http://valueflo.ws/ ) and ValueNetworks ( https://github.com/FreedomCoop/valuenetwork ) that are taking a stab at this area.
If they regulate the gig economy, most of these people will be out of work. The reason is that a company like Instacart will need to make sure that these minimum wage employees are bringing enough value to the company, which means less people being hired.
We need to ask the question, is it better to have more people making less money or less people making more money?
If you interviewed them again, do you think they would rather get paid less than minimum wage for a contract gig or nothing?
These are also contract gigs that allow a certain amount of flexibility that you don't have with a regular job (no boss, work when you want, etc).
If you can't afford to pay your bills, you should get a different job (Minimum wage jobs aren't hard to come by). This isn't going to be solved through government regulation nor should it be the fault of the company offering work.
An alternative would be the company taking money from their profits and using it to pay people a living wage.
The argument against that I usually hear is that companies pay people based on what "the market" says their labor is worth and the employees should just get a better job if they don't like it.
However, my understanding is that such analysis is based on models which assume that the people involved are rational actors. That creates a contradiction: If the employees are not rational actors then the model's assumptions are not valid. However, if they are rational actors, then the argument that they should just get a better job isn't valid because a rational actor would have already done so.
> if they are rational actors, then the argument that they should just get a better job isn't valid because a rational actor would have already done so.
If they are rational actors, why isn't the argument that their revealed preferences say that they like it "enough" to accept the bargain offered them? I tend towards the rational actor side of the debate and that they are satisfied that the bargain offered is their best option, so they (rationally) take it.
I agree that it is likely the best option available to them. My issue is with the argument that "if they don't like it they can get a different job" and therefore it is morally justified for people to be payed a sub-living wage.
I'm not saying that the parent post is necessarily making that argument, just that it seems like thats the usual justification for this sort of thing.
Indeed, "the market". Like its some kind of God, and to obey its whims is morally correct.
Maybe it is what "the market" wants, but maybe society has different preferences. We routinely choose to override the market's decisions, and we can do so here as well.
The market is distorted by the government. Smaller, independent companies cannot compete with foreign slave labor.
Low tariffs and high domestic taxes is a recipe for large corporations consolidating the supply chain in every industry.
Low wages are a symptom of government control, no other reason.
Low wages are a symptom of government control, no other reason.
In a "true" free-market, whatever that is, there would be no low wages? This seems counter-intuitive. Do you have any evidence or reasoning for this?