Shipt's 'Effort-Based' Model Is Cutting Pay for 40% of Workers, Study Shows

A new study shared exclusively with Gizmodo found that 40% of Shipt workers are seeing lower pay as a result of company changes.
A new study shared exclusively with Gizmodo found that 40% of Shipt workers are seeing lower pay as a result of company changes.
Photo: Joe Raedle (Getty Images)

Stefanie started working for the Target-owned grocery shopping app Shipt two and a half years ago. She’d previously been working for one of the app’s main competitors, Instacart, but friends told her that Shipt paid better. While Instacart and similar apps like DoorDash paid workers based on a black box algorithm, Shipt paid a predictable rate: 7.5% of the order’s worth, plus five dollars.

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That all changed in January, when Shipt began rolling out a new mode of payment based on a mysterious algorithm dubbed V2. The company has said very little about how the new model works, besides asserting that it’s “based on effort and not on the value of the order.”

“Nobody understands it. It doesn’t seem to make sense” said Stefanie, who requested we not use her last name for fear of reprisal. In Stefanie’s hometown, Shipt only rolled out the new pay scale a couple of weeks ago, and with only one week’s notice. In an email from corporate, Shipt said the change was “based on feedback from shoppers like you.” Stefanie said it feels “like I got kicked in the face as a thank you.”

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Stefanie saw her pay drop immediately, and she’s not alone: A new report from Coworker.org, shared exclusively with Gizmodo, found that more than 40% of workers have seen their pay decrease since the rollout of V2. Researchers at Coworker.org collected screenshots of Shopper orders and their resulting wages—6,503 data points from 213 Shipt Shoppers across 140 different metro areas in the U.S. in total. They believe it’s the largest database of Shipt Shopper pay information to date (other than Shipt’s own internal data, of course.)

The researchers then partnered with a PhD student at Massachusetts Institute of Technology, Dan Calacci, to build a bot that could analyze the screenshots Shoppers submitted, using optical character recognition. The team then used that data to assess how pay under V2 compared to the previous model.  

According to their conclusions, 41% of Shoppers are earning less under the new payment scheme. Among the pool of Shoppers who are making less, the average grocery trip is netting them 11% less than it would have under V1 pay.

The findings are consistent with Shipt’s claims that “while some orders may pay more and others pay less in the updated model, we have seen average base pay levels remain consistent overall.” In fact, the analysis found that overall, workers are making more under the new pay model (“about $0.99 more on average, per-shop”) that those gains “are not being distributed evenly”. About two fifths of Shoppers in the dataset were consistently making less under V2 than they would have under V1, suggesting that the new algorithm is “systematically under-paying certain workers.”

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“Orders across the country can vary by a number of factors and our updated pay model better accounts for the effort it takes to complete and deliver orders, with factors like drive times for delivery, peak shopping windows, and the number of products in each order,” Molly Snyder, Shipt’s chief communications officer, said. “We also provide transparency to shoppers with each order—including a pay range with a guaranteed minimum pay for the shop, the delivery address, and a list of all the items being purchased—allowing them to choose whether or not they want to accept the order.”

The study shows that though workers are making more on average under V2, a portion of those workers are consistently making less.
The study shows that though workers are making more on average under V2, a portion of those workers are consistently making less.
Graphic: Coworker.org
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Drew Ambrogi, a senior campaigns strategist at Coworker who worked on the new study, said that pay cuts—even if they’re only impacting fewer than half of all workers—are unacceptable.

“For me, I’m coming from a labor organizing background. So I think if you’re giving people a pay raise, but you’re cutting the pay of 40% of people, that’s not a pay raise,” he said. “Shipt is viewing their Shoppers as an aggregate as data points. So when you average a Shopper who’s making much less money with the Shoppers making much more money, when you look at the big numbers, it looks like a pay raise. But the lived reality is that in the midst of a global pandemic, 40% of people are seeing their pay being cut, and those are all real people.”

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Without any information about the Shoppers beyond the screenshots, however, it’s hard to know which Shoppers are being paid less or why that might be the case. To learn more, the researchers plan to collect more data on workers’ demographic information, and do additional analysis on how geographic location plays a role in earnings. Calacci is also working to develop more tools to help Shoppers track their pay, hours worked, and other information like expenses for car payments, which Shipt does not cover.

Crucially, the new analysis also found that the number of Shoppers earning less under V2 is increasing, since V2 payouts appear to be declining over time. The researchers have continued to collect Shipt worker data, which shows that since October 7, the percentage of Shoppers earning less under V2 has climbed to 60%. They don’t know why that’s the case, but speculated that it could be because Shipt is slowly tweaking its algorithm to lower pay over time.

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“The problem is that because there’s no transparency about how we’re being paid at all, they could change the pay model on us whenever they want to without telling us” said Willy Solis, an outspoken Shopper based in Texas.

In protest of the new pay model, Shipt workers across the country plan to stage a work stoppage this week. The organizers are asking Shoppers not to schedule any hours or accept any orders on October 17, 18, and 19.

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“We’re just not gonna take any orders. We’re not going to shop. We’re not gonna put ourselves on the schedule,” said Stefanie. “Why bust our butts to go work for someone who apparently doesn’t appreciate us?”

On October 19, workers will also protest outside Target’s corporate headquarters in Minneapolis, Minnesota. Solis, who is helping to organize this week’s protests, plans to be there by their side.

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“We’re going to be reading letters in front of Target headquarters from Shipt Shoppers from across the country to convey that message directly from the Shopper,” he said. “We want Shipt to know exactly how this is affecting our lives.”

The workers’ top demand is for Shipt to return to their old, transparent pay model, but they’re also hoping the company will better address glitches in the app which have stopped workers from getting their tips. Beyond that, Solis says he hopes the company will one day begin to classify their workers as employees instead of contractors, which would afford them more rights in the workplace.

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Solis noted that amid the covid-19 pandemic, Shipt has helped drive its parent company, Target, to record growth.

“They’re making hand over fist money, but we’re the ones that are delivering the services,” he said. “They couldn’t have made those record profits if it weren’t for us. And at the end of the day, we’re getting crumbs.”

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Staff writer, Earther

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DISCUSSION

enkidu98001
Enkidu98001

Thee gig economy is rigged against labor.

Participation in the ‘gig economy’ as either producer or consumer does damage to us all.