Bay Area Instacart employee leads revolt against grocery delivery service

SAN FRANCISCO - When Vanessa Bain quit her job working with special needs students at a public high school in Silicon Valley to become a shopper for online grocery delivery company Instacart, she was wary of tying herself to a tech start-up that relied on contractors to meet demand, with little worker protection.

But Bain, then a 30-year-old mother, was quickly won over with meaningful work and a sense of respect. And her take-home pay rose roughly 65 percent compared to teaching and tutoring combined. At the end of a day working for Instacart, Bain had more energy, which made her a better mom. When a friend who drove for Lyft complained about pay cuts, Bain urged her to switch to Instacart.

That changed just a few months later, after Instacart in 2016 began a pattern of experimenting with worker pay in ways that made earnings more precarious. That included using tips to supplement wages, a practice the company stopped in February after public outcry.

"I understand that they artificially inflated what they could afford to pay us, but since then, everything has just dropped so low," she said. "Their response is always to cut from our pay to figure out how to make this work."

Bain has turned from an Instacart evangelist into one of the most effective agitators against the company, in what has become a timely test of how much leverage blue-collar on-demand workers can amass to win better treatment from growth-obsessed technology companies that keep them at a distance. While continuing to work as a "shopper," picking items from store shelves and delivering them to consumers, she has helped build a grass-roots movement that has led to four national boycotts, including one last month. Bain is behind a Facebook group open only to Instacart shoppers who support collective action. The group has about 14,500 members, representing more than 10 percent of all Instacart's workers in the United States and Canada.

Companies such as Instacart, founded as part of the so-called gig economy, followed the same business model legitimized by ride-hailing companies Uber and Lyft, which raised billions in venture capital to subsidize rapid growth and relied on millions of contract workers to reduce costs. Drivers allege that these companies enticed them to join with bonuses and then hacked away at their pay under pressure to reduce heavy losses. Instacart workers, watching the same story unfold in grocery delivery, alleged that the company was unfairly taking from their tips to pay wages and lowering their take-home pay. But as independent contractors, they aren't covered by protections around minimum wage, overtime, unemployment or the right to form a union.

The uprising from Instacart workers demanding fair pay is just one facet of a wider reckoning by regulators, labor activists and workers themselves over the responsibilities of companies to independent contractors.

There are some signs of early success. Instacart has walked back a few planned pay changes after a firestorm of criticism, some helped triggered by Bain. But it's unclear how effective Instacart workers can be in the long run as the company cycles through recruits and faces pressure from venture capital investors who valued the company at $7.8 billion.

Instacart, founded in San Francisco in 2012, used to pay workers based on commissions per delivery and per item for jobs within a limited radius. In late 2018, the company switched to an algorithmic pay system that used distance, weight, number of items and other factors to spit out an estimated earning per job. Workers balked and shared images showing how their pay had been slashed under the algorithm.

In February, Instacart instituted minimums of $7 to $10 for each batch of orders, which can cover up to three separate customers. Workers also get tips from customers, although Instacart says the company's contribution is bigger than the tip on most orders in which contractors do the shopping and delivery. The average hourly pay for Instacart workers was $15.54 before tips and expenses, based on self-reported data representing weekly wages from 80 Instacart shoppers viewed by The Washington Post. When factoring in the hours they wanted to work and couldn't find a profitable gig, it sank to an average of $7.15 per hour.

"Our relationship with all shoppers is important, and we are constantly looking for ways to improve," said Natalia Montalvo, director of shopper engagement and communications for Instacart. "We realize we will not always agree, but we respect and support the rights of shoppers to voice their opinions."

She said workers are making more on average since the company reversed its policy of using tips to supplement wages in February. Instacart declined to say whether the average included tips. The company also said it saw "no disruption to or decline" in customer orders or quality of service during the November strike.

For Instacart, these drastic pay changes coincided with a period of rapid growth, intensifying competition and a massive influx of cash. The company has raised $1.63 billion since March 2017 and is accessible in 80 percent of American households, up from about 60 percent at the end of 2017.

The company has also expanded to offer shopping from more than 300 retailers, such as Kroger, Costco and Publix, which give Instacart a cut of transactions. Instacart has a nearly 70 percent share of the grocery delivery market, according to research firm Edison Trends.

Grocery delivery has thin profit margins. But investors pumped billions into on-demand delivery start-ups because contracting workers eliminated the need to maintain a fleet of cars or invest in infrastructure, shifting the risk to gig contractors who make up a larger part of the workforce. Over the past year, Instacart tripled its number of shoppers to more than 130,000 workers. Lyft and Uber have a combined 6 million plus drivers globally.

This setup also allows companies peak flexibility depending on demand for their services. Many gig workers, however, complain that companies exert as much control over their behavior as an employer, pressuring them to take on low-paying jobs and punishing them for rejecting a gig by kicking them off the platform temporarily. Instacart contractors have to work 30 hours a week for three weeks in a row to qualify for early access to choose shifts.

Worries about job security have made some Instacart workers hesitant to protest. Leslie Roeder, a Harrisburg, Pennsylvania, resident who has been working for Instacart since April, hasn't joined the strikes because she was worried she would be permanently deactivated.

"I like this job, and I'm not trying to get fired," Roeder said.

The collective action led by Bain and other Instacart shoppers represents a new type of labor organizing within the gig economy, said Alex Rosenblat, author of "Uberland: How Algorithms Are Rewriting the Rules of Work" and research lead for the nonprofit Data & Society. Rosenblat noted for example that the group crowdsourced information from workers to show how Instacart was making changes to pay and demanded immediate changes to the app that could help improve their working conditions, such as upping the suggested tip amount.

"For too long, the narrative about the gig economy was centered on the companies and their seemingly magical abilities to produce insane amounts of valuation in a very rapid amount of time," said Bain.

In January, Instacart chief executive Apoorva Mehta said an initial public offering was "definitely on the horizon," but after public market fumbles for Uber and Lyft, even venture capitalists are backing away from gig economy start-ups.

At a tech conference in October, Mehta said Instacart is focused on growth and profitability. "What we want to do is actually not charge our customers more and not charge our retailers more" to grow, he said.

Instacart charges each customer a delivery fee, which varies by location and how quickly the customer wants the order, as well as a service fee equal to 5 percent of the total order. Some retail partners also mark up items from the in-store price. Instacart also offers order pickup from nearly 15,000 stores.

In the meantime, its competition is moving fast. Rivals with more resources - including Walmart, Target and Amazon, which owns Whole Foods - are heavily investing in grocery delivery and pickup. (Amazon founder and Chief Executive Jeff Bezos owns The Washington Post.)

Grocery pickup from major retailers could become one of the biggest threats to Instacart due to quick customer adoption - and it's also more cost effective for the companies, said Sucharita Kodali, a retail analyst at Forrester Research. On-demand delivery is inefficient and expensive in the United States, where cities are spread out and the cost of labor is high.

"It ends up just being this vicious cycle of subsidizing delivery to attract the customer, but subsidizing delivery is not sustainable," she said.

In its early years, Instacart needed to recruit shoppers. It posted ads saying they could "earn up to $25 per hour" or $1,500 per week, according to a lawsuit claiming Instacart misclassified and misled workers, which the company settled for $4.6 million in 2017.

Jimin Song of Vallejo, California, who has been working for Instacart since August 2018, supported the goals of the most recent strike and believes Instacart should raise wages. She, however, didn't participate for a number of reasons: She needs the money, appreciates Instacart's flexibility and credits the company with helping her get back on her feet after an abusive relationship. She also felt like labor organizing efforts needed to reach a bigger swath of workers before making a real impact.

"What they're trying to achieve overall is great, but they can't reach everybody," said Song, who was featured in a promotional video for Instacart.

When Bain first started working for Instacart in early 2016, she was burned out from helping kids on the autism spectrum and students with mental and physical disabilities during the day and tutoring four or five nights a week. But she quickly found that delivering food to new moms and the elderly was rewarding, and her tips reflected her skill in picking the right avocado or knowing how to quickly find Tofurky. Instacart even had a Shopper Happiness team staffed by former shoppers who valued worker input, a service often handled by contractors in call centers.

Plus, her take-home income averaged about $1,200 a week for 40 to 45 hours of work, a big bump from about $750 between teaching and tutoring.

In September 2016, after Instacart sent what she described as an "earth-shattering" email that it would stop collecting tips - which at the time made up about half of her income - she felt compelled to take action, especially coming from a family of civil rights activists. (Bain's mother is black and indigenous, and her father is white. She describes herself as a "white-presenting woman of color.") She searched for other irate workers by typing the hashtag #boycottInstacart on Instagram and found two other shoppers also determined to fight back.

"Gig workers have for a very long time existed on the fringe of society. People interact with them on a daily basis almost, but don't really think about the human impact," said Bain. "It shouldn't be that cheap to have somebody do the labor of all of your grocery shopping and delivery for less than minimum wage."

The trio started a Facebook group and began building a grass-roots network of other Instacart workers by approaching people at their workplaces: the grocery store.

At first, Bain was insecure about going up to strangers, she said, but she figured out who was working for Instacart by their posture and the way they checked their smartphone while shopping. Recruits were directed to the Facebook group and then instructed to recruit another five members.

"We're just regular people who saw that they were really taking advantage of us, and we decided to organize against them," said Sarah Clarke, a former product designer in Mountain View, California, who started working for Instacart in 2016 and also launched the Facebook group.

In the three years since she started organizing, Bain said, interactions between activists and Instacart became a "high-stakes game of tug of war." Instacart announces a pay change. Workers push back by walking off the job or publicly shaming the company on social media. In response, Instacart would make some concessions and alter the proposed changes.

She says she is able to afford organizing only because she doesn't have to pay rent. Instead, Bain, her husband and their 11-year-old daughter sleep in a 120-square-foot prefab structure that is retrofitted with drywall and flooring in the backyard of her great-grandmother's house in Menlo Park, California. Her daughter has a loft bed, and Bain and her husband sleep below. They use the kitchen and bathroom inside the house, which is home to five generations of family members, including her 94-year-old great-grandmother. Bain is responsible for the water and electricity bills, which can sometimes cost more than the $400 monthly mortgage, given all the people on the property.

Last month, Bain and Clarke planned a three-day strike. It was preemptive, for they were anticipating a major end-of-year pay or policy change that would drive down wages. This strike called for Instacart to return the default option in the app for customers to tip to 10 percent after lowering it to zero in 2016 and then raising it back to 5 percent in April 2018.

Bain and Clarke assembled an informal council of about 10 other female Instacart workers to vet ideas and debate strategy. They spoke by phone or in group chats on Facebook.

"We're not professionals at this. We're just 10 or 11 really pissed off women," said Heidi Carrico, an Instacart shopper in Portland, Ore., and one of the council members.

While unions help cover lost wages during a strike, contractors have no such protection. To shield workers who needed the money, the women debated which days and for how long the strike should last and brainstormed a range of actions, from turning off the app to accepting and canceling orders.

Starting Nov. 3, thousands of Instacart contractors participated, according to rough estimates from organizers based on feedback from the Facebook group. In solidarity, some Instacart customers also deleted the app, posting under the hashtags #boycottinstacart and #deleteinstacart.

A couple of days after the November strike ended, Instacart announced it was cutting $3 quality bonuses paid every time a shopper was rated five stars. Supporters interpreted it as retaliation, which led to another round of criticism on social media.

Instacart's Montalvo said that the timing of the decision was not related to the strike and that the company found that the bonus did not improve the quality of orders.

Clarke said she thinks Instacart customers were moved to delete the app because of a viral Twitter thread supporting the strike by Bay Area activist Sasha Perigo, which was retweeted more than 8,000 times. Bain said former Google workers, fresh off organizing engineers, offered guidance on how to keep the protest in the news and spread their message.

"We're collaborating to really lift each other's voices up and to build a narrative around worker power that I think our country has severely lacked for a really long time," said Bain.