Target's Delivery App Workers to Be Paid by a Blackbox Algorithm Nationwide

Target's delivery app Shipt claims that the new pay model will compensate its 200,000 delivery workers based on "effort." But in cities where the model has already taken effect, workers claim their wages have fallen by 15-50 percent.
September 11, 2020, 4:20pm
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The Target-owned delivery app Shipt will soon determine pay for its 200,000 gig workers nationwide using a blackbox algorithm, according to an internal announcement made on Thursday and obtained by Motherboard. 

Shipt claims that the new pay model will compensate delivery workers more equitably. "We highly encourage all of you to try out the new pay model and keep in mind that this pay is based on the effort of the shop," Shipt posted on its private Facebook group for gig workers on Thursday. 

But shoppers (Shipt calls its gig workers "shoppers") fear that the transition from a transparent, commission-based pay model to an algorithmic one that obscures how pay gets calculated will result in dramatically lower earnings.  

Already, in cities such as Birmingham, Alabama; San Antonio, Texas; and Kalamazoo, Michigan, where an algorithmic model went into effect earlier this year, workers say their hourly earnings have dropped by 15 to 50 percent. By the end of September, Shipt says it will roll out the new pay model in more than 230 new cities. 

"Shipt says shoppers are now being paid on effort. This is insulting on its face. This implies shoppers were not putting in effort prior to the non-transparent algorithm being forced on us," Willy Solis, a Shipt delivery worker in Dallas, Texas and an organizer for the Gig Workers Collective, told Motherboard.

"What we are seeing with this new pay model is a shopper must complete significantly more orders, put in more hours, drive more miles, and expose themselves to greater risks of contracting COVID-19 to make the same pay," he continued.

On apps such as Instacart, DoorDash, Lyft, and Uber that already use blackbox algorithms to calculate wages, gig workers have complained that they are at the mercy of routine, unexpected tweaks to their pay and have no guarantee that they'll make the minimum wage. As independent contractors, gig workers do not receive minimum wage guarantees, overtime pay, health insurance, or other benefits afforded to workers with employee status, and must pay for costs like gas and wear-and-tear on their cars out of their own pockets.

"Algorithmic [pay models have] had a severe negative impact on wages across the so-called 'gig economy,'"  the authors of New York University's AI Now 2019 report write. "These platforms treat workers as subjects of constant experimentation, often in ways that destabilize their economic and even psychological security." 

A spokesperson for Shipt denied that wages have suffered from the new pay formula, which weighs factors including driving time, peak shopping windows, location, and number of items to calculate to pay. 

"As we have tested and rolled this model over the past two years, we have closely monitored how it was working," Molly Snyder, the Shipt spokesperson said. "We have consistently seen, and continue to see, that pay for shops has remained stable overall. And, in the markets where we rolled this model out over the summer, we have seen that week over week, we see increasing numbers of shoppers in those markets putting themselves on the schedule, accepting and completing shops."

Shoppers already working under the new pay model say they’re earning significantly less than they used to on large orders that sometimes have hundreds of items. A Shipt spokesperson said “the number of items incorporated in the shop is always factored into the compensation estimates,” but would not explain if this metric is weighted less than others.

Under the previous pay model at Shipt, workers were paid $5 plus a 7.5 percent commission on all orders. 

In July, Shipt shoppers across the country went on strike, refusing to accept orders after Shipt announced the new pay model was rolling out in 38 cities. In April, Shipt workers organized the company's first walkout, after it failed to provide basic protective gear during the COVID-19 pandemic. 

Experts say that gig economy apps, like Shipt, strategically deploy a bait-and-switch model that lures workers in with lucrative, transparent pay and flexible working hours. Once workers have shaped their lives around working on the app, companies switch to more opaque payment systems, which allows them to cut costs by lowering earnings without workers' knowledge. 

Joshua Denver, a Shipt gig worker in Denver, Colorado, where the new pay model rolled out on July 15, said his earnings have plummeted under the new pay model to such an extent that he barely works on the app, which he has relied on since 2017 to pay his bills while he runs a non-profit. Instead, he has switched to its competitor Instacart. 

"I've seen my earnings drop drastically, particularly on large orders," Denver told Motherboard. "For example, I made $16.32 on an 89-item order I shopped recently. Under the previous transparent pay scale, I would have made $27.50."

Because Denver has started accepting fewer Shipt orders (he says many of the ones he's offered "aren't worth it"),  his acceptance rating, which factors into how many offers he receives, has suffered, taking a further toll on his ability to earn income from the app.

"The new pay model is extremely scary. There's no way to look at the algorithm to see how you're getting paid," he continued. "Knowing that I need to work more hours for less pay is really stressful. It's not right that the company is doing this."

Another Shipt shopper who wished to remain anonymous because she feared retaliation from the company for speaking to the press, told Motherboard that she's seen her average earnings on orders have dropped by 15 percent since the new pay model rolled out in Birmingham, Alabama on July 15. 

Shipt, which was acquired by Target for $550 million in 2017, has gained notoriety for a culture of censorship and retaliation on its Facebook group for workers. As Motherboard reported in February, Shipt censors workers' posts, turns off comments sections, and bans workers who speak negatively about their working conditions from its Facebook group, the "Shipt Shopper Lounge." According to a new admin rule reviewed by Motherboard, workers can longer post links to outside news articles on the Shipt Shopper Lounge.

 A Shipt post on Thursday announcing the algorithmic pay model’s nationwide rollout had its comments section turned off.