Bowing to worker pressure and negative press about instances of miniscule payments on assignments (as low as 80¢), grocery delivery service Instacart agreed to guarantee new minimum payments–ranging from $5 to $10–to all its drivers, known as “shoppers,” beginning February 19. But shoppers we spoke to say matters haven’t improved, and may have gotten worse. Now they have new tools to make their case. Labor rights organization Working Washington has created online calculators that let shoppers determine the hourly rate for a given assignment offered or completed.
Shoppers have been exchanging screenshots of dozens of offers that Instacart’s app has presented since the new pay structure took effect on February 19. (The policy sets minimums; assignments can pay much more, depending on size and travel involved.) Running 44 of them through Working Washington’s calculators, Fast Company found an average hourly rate–for those specific offers–of $9.12 before tip, and $11.83 including tip. Instacart declined to comment publicly on Working Washington’s methodology.
The shoppers who have been sharing offers have focused on ones they found to be exceptionally low, so their samples may not represent typical current Instacart offers. But the volume of these low offers indicates that they are not isolated instances. (The 44 we evaluated are a subset from a steady stream being shared on a national Facebook group for Instacart shoppers or sent directly to Fast Company.)
The quest for a minimum gig wage
Since 2009, the federal minimum wage has been $7.25 per hour. State minimums range up to $13.25 (in the District of Columbia), and Working Washington is leading a national campaign, among Instacart and other gig workers, demanding a minimum of $15 per hour, not including tips or expenses. (The Federal government and most states allow tips to count toward minimum wage. A few states do not.)
As independent contractors, Instacart shoppers are not covered by federal, state, or local minimum-wage laws. They are responsible for self-employment expenses, such as use of their cars and taxes that would otherwise be paid by an employer.
Instacart calculates pay offers based on the work required for each shopping assignment, rather than per hour. But it used to discuss hourly averages until a few weeks ago. “The national average across our platform is above $15 per hour of work,” Instacart’s chief product officer David Hahn tells me on January 30. (That’s including tip.)
Instacart’s driver app provides four minutes to accept or decline an offer, and it can be difficult for contractors to quickly convert the service’s complex pay structure into a real-life bottom-line number in their heads. The Working Washington calculators show that a few examples of purported bad offers would actually pay quite well: For instance, one worked out to $29.05 per hour. Conversely, the lowest hourly rate we found using Working Washington’s method was $2.74 without tip, $3.27 with. (Instacart’s goal is to ensure that compensation–including tip–is “both competitive, and it’s a premium relative to minimum wage,” says Hahn.)
A history of discontent
The latest shopper complaints fit into a larger narrative. Unhappy shoppers allege that wages have been declining, at least since Instacart introduced a new pay algorithm in 2018. (Instacart says that average pay has been unchanged, though it may have gone up or down for particular types of assignments that were under- or overpaid in the past.) Among the newer complaints: Instacart is increasingly bundling multiple grocery orders into a single assignment, known as a batch.
Instacart’s batch payment is based on factors such as the total number of products in an order. It also factors weight of items, the type of store, times of high demand (with a “Peak Boost” payment), and mileage. While these factors do account for the total work involved in multiple orders, shoppers remember a time when there was additional payment for each order added. And they charge that the new algorithm does not adequately compensate for the extra work of two or more deliveries.
Since February 19, posts to the Facebook group show several jobs paying the new bare minimums. Those are $5 for a drive-only delivery (in which Instacart employees at stores shop and pack the orders), and $7 to $10 (depending on location) for full-service batches, in which the shoppers pick out, pack, and deliver the goods.
Most minimums for full-service orders that shoppers shared have been around $7 or sometimes a few cents more, such as $7.30, with no tip (for two orders totaling 14 products, and 2.9 miles of driving). A poll of workers on Facebook showed 100 reporting $7 as the minimum for a full-service order in their area, eight reporting $8, two reporting $9, and no one reporting $10.
According to Instacart, the minimums are based on factors including the total number of shoppers in the area and customer demand. San Francisco, New York City, and Boston are among the cities with a $10 minimum, it says, due to their size, high volume, and large customer base. Midsize markets including Portland, Denver, and Chicago range between $8-$9. Smaller markets have a $7 minimum.
In some cases, Instacart’s new minimums work out to less than the pay guarantees of the past. Previously, Instacart guaranteed that a shopper would make at least $10–through a combination of payment from Instacart and customer tip. Shoppers are now showing examples of $5 or $7 batches (or a few cents more) in which the tip is zero, leading to lower pay.
What’s a gig job worth?
Working Washington’s calculations are based on the pay received from Instacart, minus expenses. Instacart pays shoppers 60¢ per mile, which Instacart considers part of pay. Working Washington calls it an expense reimbursement: “Mileage is a reimbursement, not pay. That’s what mileage means,” says communications director Sage Wilson. (Instacart’s rate nearly matches the IRS allowed rate of 58¢ per mile to “calculate the deductible costs of operating an automobile for business.”)
Working Washington counts Instacart’s payment, minus mileage, as true pay, after subtracting 7.56% for payroll taxes. Why does the organization single out this one tax? Salaried employees split the 15.3% federal payroll tax (social security and Medicare) with their employer, but independent contractors pay the full amount on their own.
The payment calculator defaults to 60 minutes per assignment, a rule of thumb used by Instacart shoppers for an average assignment. In some cases, experienced drivers provided time estimates that were longer or shorter than 60 minutes, and we used those figures. “If the feedback is that jobs typically take less or more, I’m happy to change that default in a second,” says Wilson.
In addition to providing estimates for drivers, the web calculators allow them to submit the data anonymously to Working Washington. “We’re obviously not going to have a record of every single job,” says Wilson. “But if we’re getting hundreds and hundreds, it gives another lens into how the pay is working.”
We shared our findings based on Working Washington’s system with Instacart and invited critique of the organization’s methodology. The company declined to comment on specifics. It did issue the following statement.
We value our community of over 70,000 dedicated shoppers and, as we said in our recent announcement, we’re committed to improving the Instacart shopper experience. While there’s more work to do, we’ve begun turning feedback into actionable changes for shoppers. The voice of the Instacart shopper community plays an integral role in shaping our product and we look forward to continuing to have an open dialogue with shoppers to deliver the best possible experience.