Instacart Announces Plan To Cut Couriers' Rates By 63 Percent

By Staff Reporter | Mar 12, 2016 11:06 AM EST

San Francisco-based grocery delivery startup Instacart has announced that it will revamp its pay system for its shoppers and drivers. Unfortunately, most of the modifications involve cutting the pay for its workers by up to 63 percent.

Among the company's employees, it is the shoppers and drivers who are set to be affected the most. Shoppers, whose tasks include selecting items off grocery shelves, are set to have their per-item commission reduced 50 percent to just $0.25. Delivery drivers are set to experience an even greater pay cut, with their commissions dropping from $4.00 per trip to just $1.50, translating to a 63 percent decrease.

Analysts believe that the cost-cutting measures are part of the company's ways of containing its operating costs amid steep competition and an ever tightening funding environment. With the changes in place, however, workers, especially shoppers and drivers, would have to work almost three times in order to earn their previous income.

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Instacart, however, maintains that the company's decision is not designed to give its workers a hard time. An Instacart spokesperson asserted in a statement that despite the steep pay cuts, the startup remains competitive in the grocery delivering business.

"Attracting and retaining shoppers is vital to running our business. We have made some recent rate changes to reduce variability in how much shoppers earn, and we are constantly innovating to help shoppers get more orders. After these changes our shoppers will earn, on average, an effective rate of $15-$20/hour, which is both in line with historical levels and strongly competitive within our markets," the spokesperson said.

The company also stated that with the new system, drivers could still easily make about $18 to $20 per hour. However, the company's modified expectations for the shoppers' and the drivers' rates are heavily reliant on tips that the workers would receive from customers.

Of course, tips are never consistent, and workers have pointed out that some customers do not even give tips at all. Thus, the company's announcement has been met with some criticism.

Speaking on the issue, California assemblywoman Lorena Gonzalez has urged lawmakers to enact certain provisions that protect employees from sudden pay changes like those which are set to affect Instacart's workers.

"This highlights how dramatically conditions can change for workers who aren't able to negotiate for themselves, which is why lawmakers need to play a role in protecting the people who are actually doing the work," she said. 

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