The Washington Post - 12.11.2019

tuesday, november 12 , 2019. the washington post eZ re a

order to shop, check out and

deliver items.

Drivers also receive 60 cents

per mile between the store and

the customer (based solely on the

distance between point A and

point B, not the actual route or

drive time). Workers are not paid

for the amount of time it takes

them to drive to the supermarket,

which they say can sometimes be

20 or 30 miles away.

Driver Sharon Harris says it all

adds up to a guessing game — and

lower wages.

“When I first started, I was able

to make a living w age,” s aid Harris,

who lives in Anaheim, Calif., and

has been delivering groceries for

Instacart for two years. “They’ve

slashed that by a good 50 percent.”

Two years ago, she says, she

could easily make $1,000 a week.

These days, she takes home about

$500 a week, although some

weeks she makes as little as $100.

“Every time they make changes,

it reduces what we make. Every

single time,” said Harris, 37, a

single mother of teenage daugh-

ters. “It’s become like the Hunger

Games.”

There is a growing movement

to reclassify gig workers as em-

ployees, which would ensure that

they receive a minimum wage, as

well as certain benefits and legal

protections. California last month

passed legislation that makes it

harder to classify gig workers as

contractors. Uber, Lyft and Door-

Dash are spending millions to

fight that law.

Although demand is growing,

grocery delivery is still a small

sliver of the market. Online gro-

cery ordering makes up about 2.

percent of the overall grocery m ar-

ket, although that figure is expect-

ed to more than double to 7 per-

cent by 2023, according to data

from Met Life Investment Man-

agement.

Corwin Samuelson, 58, has

been delivering groceries for five

years, first for Instacart and then

for Shipt. “Gamified” bonuses, he

said, have become a growing reali-

ty: Deliver 15 orders in two days,

receive $200, perhaps, or 50 or-

ders in a week for $700. A spokes-

woman for Shipt said that pay

varies, depending on location,

store and order, and that the com-

pany has “evolved our pay struc-

ture” i n certain cities to account

for factors such as traffic and

shopping time. Those changes,

she said, have resulted in higher

average pay rates in Washington,

New York and Seattle.

Although such bonuses can be

substantial, Samuelson says they

give him little control over how

much money he takes home each

week, even if he keeps consistent

hours. Those large s wings i n week-

ly pay, he said, can also make it

difficult to secure an apartment or

estimate the taxes he owes. He has

been living in Seattle-area hotels

and Airbnbs for the past three

months because he says he cannot

afford a security deposit for an

apartment.

“Just pay us,” he said. “Don’t

game my paycheck, don’t mess

with our livelihoods. We’re under

enough pressure already without

feeling like, ‘Oh, no, if I don’t

make some number, I can’t pay

my rent.’

[email protected]

Instacart has made two signifi-

cant changes to its earnings struc-

ture since October 2018, which

company executives say are

aimed at increasing transparency

and consistency for its 130,

contract employees. Most work-

ers shop, bag and deliver orders,

although some handle only deliv-

eries.

Delivery workers used to be

paid a flat 40 cents per item, with

bonuses sprinkled in. Last Octo-

ber, Instacart began calculating

pay based on factors including

product weight and driving dis-

tance from the store to the cus-

tomer. There were other consider-

ations, too: An order from a club

store like Costco, for example,

might pay more than one from a

grocery store. In February, after

complaints that it was not proper-

ly passing on customer tips, the

company began showing drivers

how much of their pay was com-

ing from tips. Workers can now

see how much they’ll be paid

before they accept an order.

Instacart also guarantees driv-

ers at least $5 per delivery, al-

though drivers say a single order

can sometimes take them more

than two hours to complete, de-

pending on distance and traffic.

Full-service workers, meanwhile,

are guaranteed at least $7 per

widespread outrage from workers

and customers, chief executive

To ny Xu said the company would

begin giving workers their tips.

“A fter a year of research and

conversations with thousands of

Dashers, we built a pay model to

prioritize transparency, consis-

tency of earnings, and to ensure

all customers get their food as fast

as possible,” Xu wrote in a series

of tweets this summer. “But it’s

clear from recent feedback that

we didn’t s trike the right balance.”

Instacart, which paid $4.6 mil-

lion to resolve similar complaints

in 2017, is facing a class-action

lawsuit that accuses it of “inten-

tionally and maliciously” using

workers’ tips t o pay their wages. A

spokeswoman for the company

declined to comment.

Galves, the Instacart worker,

says it has become more difficult

to reach his personal goal of $

a day. He sometimes has to work

15 hours to make that much,

which translates to $6.67 an hour,

before taxes.

“I’m not expecting to get rich

from this job,” s aid Galves, who is

helping to put two sons through

college. “I just want to be able to

feed my family and earn a living

wage.”

It’s ‘like the Hunger Games’

by the platforms. Workers are

constantly being rated and

ranked, and are competing

against each other for pay."

That “game-ification” of gig

work — o ffering sporadic b onuses

for delivering a certain number of

orders, for example — allows com-

panies to keep workers on their

toes without committing to high-

er pay long-term, she said. And

the opaque nature of algorithm-

heavy platforms, she said, means

companies can make incremental

changes without raising red flags.

“It’s not even like they have to

change an hourly rate across the

board,” Ravenelle said. “There is

no hourly rate.”

In interviews, Postmates work-

ers said they are making 30 per-

cent less than they once did after

the company changed its algo-

rithms and eliminated a $4-per-

job guarantee in May. A spokes-

woman for the company said it

“remains committed” t o allowing

its workers to “cumulatively earn

even more in a given hour.” Work-

ers in Washington, D.C., she said,

make an hourly average of $18 in

pay and tips.

DoorDash, which uses contract

workers to deliver food for Pizza

Hut and Chili’s, recently made

headlines for using customers’

tips t o offset workers’ wages. After

labor analysts say the prolifera-

tion of app-based platforms such

as Uber, Postmates and Instacart

has given tech companies unprec-

edented power to change how

workers are paid.

“Demand for services like In-

stacart has exploded and it’s g oing

to take a while to reach a n equilib-

rium,” said Paul Oyer, a labor

economist at Stanford Universi-

ty’s Graduate School of Business.

“These are new business models.

They’re creating a market from

scratch, so I don’t t hink t here’s a ny

great s urprise t hat there’s g oing to

be some tinkering.”

Experts who study t he gig econ-

omy say they expect pay rates to

inch lower in coming months, as

companies such as DoorDash and

Instacart take steps to go public.

And, they note, any pullback in

consumer spending could h ave an

outsize effect on paychecks —

grocery delivery and takeout or-

ders are, after all, relatively easy

cost-cutting targets.

“These workers are very much

on their own,” said Alexandrea

Ravenelle, an assistant professor

of sociology at the University of

North Carolina at C hapel Hill and

the author of “Hustle and Gig:

Struggling and Surviving in the

Sharing Economy.” “All of the

power in the gig economy is held

W

hen Ulysses Galves began
working for Instacart last
year, he easily made $
a week ferrying groceries from
supermarkets. He averaged about
$18 an hour and even qualified for
bonuses — an extra $200, say, for
making 40 deliveries in a week.
But within months, that began
to change. Then it changed again.
Now the 47-year-old Iraq War
veteran from Silverdale, Wash.,
says he’s lucky to pull down $
a week for the same 40 hours of
work. He u sed to be guaranteed a t
least $10 an hour, he adds, but
that’s no longer the case. Now he’s
bracing for another hit, after In-
stacart said that it will drop its
“quality bonus” — a $3 reward for
every five-star review received.
“The changes are subtle —
they’re small steps, so you kind of
accept them,” said Galves, who
also delivers for Postmates to
make ends meet. “You lose a little
money here and there — and after
a while you realize you’re making
half of what you used to.”
The nation’s largest retailers
are jostling to win over customers
through their groceries, fueling
explosive revenue growth for de-
livery services such as Postmates,
Door Dash, Instacart and Fresh
Direct. The companies also have
caught on with investors, attract-
ing hundreds of millions of dol-
lars in venture capital.
Walmart and Costco have in-
vested heavily in grocery delivery
in recent years, as has Ta rget,
which acquired Shipt in 2017 for
$550 million as part of its push
into the arena. A mazon upped the
ante last week by expanding free
grocery delivery for millions of its
Prime members. (Amazon found-
er Jeff Bezos owns The Washing-
ton Post.)
But filling and delivering gro-
cery orders is labor-intensive and
costly, and drivers for many third-
party p latforms say they are being
wrung out in ways that ultimately
result in lower pay and less trans-
parency about how their wages
are calculated. Their pay is typi-
cally structured on an automated
maze of moving parts — including
order size, driver availability and
driving distance. But with one
tweak of an algorithm, companies
can effectively change wages for
hundreds of thousands of con-
tract workers, who are not guar-
anteed an hourly minimum or
other employee protections.
“These companies got estab-
lished, they got good workers, and
now they’re following a classic
business playbook: squeezing
workers as a first-line approach to
making profits,” s aid Erin Hatton,
an associate professor at the Uni-
versity at Buffalo who studies
labor issues. “This technology —
which could easily be used to
increase transparency — is actu-
ally being used to do the oppo-
site.”

Explosive demand

Gig work is nothing new —
contractors, freelancers and the
self-employed have made up a
significant part of the U. S. econo-
my for decades. More than 10
percent of Americans rely on gig
work for their primary income,
according to data f rom the Bureau
of Labor Statistics, and exerts ex-
pect that f igure will o nly grow. B ut

BY ABHA BHATTARAI

Economy & Business

sPace tecHnology

SpaceX launches 60

Starlink satellites

SpaceX launched its second
batch of 60 Starlink satellites on
Monday, taking another step
toward Elon Musk’s vision to
create a network for space-based
broadband Internet service
around the world.
One of SpaceX’s Falcon 9
rockets rumbled aloft at 9:
a.m. local time from Cape
Canaveral Air Force Station in
Florida. The satellites deployed a
little over an hour after the
launch.
A space-based Internet service
will be an important source of
funding for the closely held
company, according to Musk,
who founded SpaceX in 2002
with the ultimate goal of
enabling people to live on other
planets. SpaceX launched its first
batch of satellites in May and has
tinkered with the design to
increase spectrum capacity.
The first stage of the Falcon 9
rocket, which flew in three
previous missions, landed back
on a drone ship about 8^1 / 2
minutes after the launch.
SpaceX called off an attempt to

use two vessels to catch the

fairing — the nose cone that

protects the payload — out of

concern about sea conditions.

The company still plans to

retrieve the fairing, which was

used in one mission earlier this

year, once its two halves splash

down.

SpaceX plans to continue

launching Starlink satellites in

batches and aims to provide

service to parts of the northern

United States and Canada next

year, according to Starlink’s

website. The company isn’t alone

in wanting to start a

constellation: Jeff Bezos’s

Amazon has a rival effort called

Project Kuiper, and SoftBank

Group-backed OneWeb aims to

have a network available by 2021.

(Bezos also owns The

Washington Post.)

— Bloomberg News

ManuFacturing

Adidas ‘speed factory’

experiment ends

Adidas plans to idle

experimental “speed factories” in

the United States and Germany,

redeploying techniques

developed there to suppliers in

Asia, where the vast majority of

its products are already made.

The decision is a setback for

anyone who hoped that projects

such as the speed factories

represented the dawn of a new

era of manufacturing in Europe

and North America. The facilities

were pitched as a way for Adidas

to profitably produce footwear in

high-cost, developed economies.

The move reflects Adidas’ need

to bridge the often conflicting

goals of catering to customers’

changing whims ever faster while

holding down production costs.

Outsourcing the next-generation

techniques it developed for the

factories, including enhanced

3-D printing, is sensible for a

company that makes only a tiny

fraction of its own products,

Cedric Rossi, an analyst at Bryan

Garnier, said by phone.

The German sports company

plans to expand its offering of

footwear that’s designed and sold

within weeks — rather than

needing months or years —

beyond just the specialty

sneakers that have been made at

the speed factories in Atlanta and

Ansbach, Germany, according to

a statement.

The Ansbach facility, which is

as large as half a soccer field, has

needed only about 160 people to

make 1,500 pairs of shoes a day,

or 500,000 annually. The highly

automated process has largely

replaced manual stitching and

gluing with molding and

bonding done by machines.

— Bloomberg News

also in Business

Merck on Monday received

approval from the European

Commission to market its Ebola

vaccine, less than a month after a

European medicines panel

backed the first-ever vaccine

against the deadly virus. The

vaccine, Ervebo, is approved for

individuals aged 18 years and

older and has already been used

under emergency guidelines to

try to protect against the spread

of a deadly Ebola outbreak in

Congo.

The Federal Aviation

Administration on Monday

downgraded Malaysia’s air safety

rating, restricting the country’s

airlines from adding new flights

to the United States. The FAA’s

safety rating is based on

Malaysia’s aviation oversight

regime and is an assessment of

the country’s civil aviation

authority. The downgrade does

not affect existing flights.

Airbnb, Chobani, Western

Union and a dozen other

companies are urging the

withdrawal of a Trump

administration proposal to slow

down the work permit approval

process for asylum seekers. The

companies — joined by Uniqlo,

Ben & Jerry’s, DoorDash and

others — spoke out against a

recently proposed regulation in a

letter sent to U.S. Citizenship and

Immigration Services on Friday.

— From news services

digest

Philimon bulawayo/reuters

Zimbabwe’s government is touting low-denomination bank notes

as the solution to the cash shortage that has crippled the country’s

economy. But the notes failed to arrive as scheduled on Monday,

leaving banks in confusion and customers frustrated. The dearth of

cash and shortages of staple goods exacerbated by a long drought

have sent inflation to its highest rate since 2008.

‘Don’t game my paycheck’

Grocery-delivery workers in gig economy say they’re being squeezed by ever changing algorithms

Patrick t. Fallon/bloomberg news

Instacart workers fill orders at a Whole Foods store. The company, one of the grocery-delivery services experiencing explosive

revenue growth from the nation’s largest retailers, s aid it will drop its “quality bonus” — a $3 reward for every five-star review.

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