Marcus Amison pushes his grocery cart through a cavernous Costco aisle and faces the typical shopper’s problem — he can’t find what he’s looking for.
Amison isn’t your typical shopper. He wears the green, branded T-shirt of Instacart, a San Francisco-based grocery service that promises home delivery in as little as an hour.
He picks up shrink-wrapped Kosher Chicken Thighs and scans the bar code with his smartphone, uses a company-issued credit card to finish the purchase and loads it into the back of his 2000 Dodge Intrepid.
“Might as well make some extra money when I can,” says Amison, who works as a full-time chef at the Marriott Marquis, but makes $15-$20 an hour working 20 hours per week as a contract worker for Instacart.
Instacart is part of the growing service-job economy, in which people rent themselves out for profit. Uber and Lyft are taxi-like services in which riders use an app to summon a ride from average citizens to the airport or home from a bar. TaskRabbit will get a freelancers to run errands or deliver laundry to your door.
Customers save a trip or get a ride, the companies’ freelance workers get flexible jobs and extra cash, and the companies take a middleman’s cut.
As this fast-emerging marketplace blossoms into what Forbes predicts will pass $3.5 billion in value this year, economists debate the value brought by a new industry that creates low-end, low-skill jobs. And some of the technology-enabled businesses are prompting protests among companies they are displacing, such as cab drivers. They operate under an array of regulations and say the new entrants bring unfair competition.
Jeff Faux, founder of the Economic Policy Institute and author of “The Servant Economy,” worries an increase in insecure, relatively low-wage jobs perpetuates a growing economic problem.
“It’s another strong piece of evidence in the direction that we are moving toward the servant economy, where the gap of the shrinking number of haves and larger number of have-nots is growing,” Faux said.
The companies require workers to use their cars and smartphones and obtain insurance. Workers must also withhold income taxes from their earnings.
These loosely-affiliated employee fleets invite concerns that workers will be exploited through low wages and a lack of benefits.
But Andrew McAfee, a member of the MIT Sloan School of Management specializing in the digital economy, paints a different future for the budding industry
“This is putting labor dollars back into the market,” McAfee said. “This seems like an unambiguous win.”
Mobile technology is driving the change. It’s relatively inexpensive to set up a nationwide infrastructure for providing services compared to a few years ago.
“This business model feels like it was possible in the pre-mobile area,” McAfee said, “but it’s certainly more feasible and smarter now.”
Instacart doesn’t own any warehouses or delivery cars, a stark contrast to the previous face of grocery home-delivery, Webvan. It crashed in 2001 after spending $1 billion on warehouses and infrastructure across the U.S.
“There was the supply chain, real-estate issue, spoilage, and then add logistics and delivery to that,” said Matt O’Connor, an Instacart “city launcher” who set up the start-up’s operations in Atlanta. “Having one company do all of that is a little bit of a fool’s errand.”
O’Connor, a recent Notre Dame graduate, helped launch operations in Boston, Washington, New York and Austin. He expects there will be hundreds of Instacart shoppers on contract in Atlanta by the end of the year. Each employee is vetted through interviews and background checks and trained in a whirlwind first day.
It is going to have to compete with a growing field of grocery delivery businesses, including Grab a Buggy and ColdLife Organics, in metro Atlanta. Also on the horizon, Amazon Fresh and Walmart-To-Go are piloting similar programs on the West Coast.
“People are willing to give companies like this a fresh look,” McAfee said.
One future hiccup for the service-job economy could be liability concerns. Uber’s drivers have been sued for accidents, including one suit filed in San Francisco after a 6-year-old girl was hit and killed. An Instacart driver, in a rush to make the company’s one or two-hour delivery promise, could face similar charges if an accident were to occur.
“Oftentimes businesses are using independent contractors as a method to avoid the responsibility that they would have if they were classified as employees,” said Ashley Kelly, a partner at Arnall Golden Gregory Attorneys at Law. “That could be a slippery slope.”
Workers say they like the flexibility: they can pick their own hours and often work around other jobs.
Leah Jones, 25, of Atlanta shops for Instacart while preparing to start her own hot-dog stand business on Edgewood Avenue. Lorie Harris, 47, from Candler Park, works at Epworth Day School and uses the extra income to help raise her two daughters, Harper and Addie.
“Honestly, I make more at one shift with Instacart then I do as a lead pre-school teacher,” Harris said.
The people who use the services pay for the convenience or because it helps them in other ways.
Kent Cook, a 48-year-old from Decatur, has multiple sclerosis and used Webvan in the past.
“If you’re willing to pay a little more to have it delivered, it shouldn’t be a problem,” Cook said. “I’ve used them twice since they started a week ago. So far, so good.”
Instacart and other similar services are not the first to digitally connect buyers to sellers. The model popularized by EBay and Amazon took retail out of stores and into our computers.
The next question is whether businesses will continue to employ higher-salary workers with benefits or will move to outsource jobs to the service-job economy’s promise of diffused, inexpensive labor.
McAfee, the digital economist, sees the second choice as the future.
“If we are concerned about the precariousness of these kinds of jobs, the answer is not to try and make sure everyone provides industrial-era benefits,” McAfee said. “I think that world is increasingly in the back mirror.”
About the Author
