General Intelligence
Why Algorithmically Calculated Wages Are Bad News for Gig Workers
Dynamic pricing allows gig platforms much greater control over their workers
OneZero’s General Intelligence puts the week’s biggest A.I. news into context.
Gig workers who deliver groceries and other essentials for Shipt, a delivery gig platform owned by Target, went on strike this weekend, protesting the company’s new algorithm that determines how much they are paid.
Before this year, Shipt’s 200,000 workers nationwide knew how much they would be paid per delivery: 7.5% of the total order they’re delivering, plus a $5 flat fee. But since January, the company has been rolling out a new algorithm, dubbed V2, that uses an unknown formula to calculate what a shopper will earn for their work.
Shipt wrote in July that this algorithm tries to pay out based on “effort,” rather than just the cost of the order. It takes into account estimated driving time, how many items are in an order, and peak times and locations. But workers aren’t told the specific calculation behind how the payment algorithm works.
For example, Shipt has publicly said that driving time is an important aspect of the algorithm. But how much does it factor into the worker’s final pay? And do Shipt workers who live farther from a store or final delivery destination now get paid more for the same job? And how will workers know when those factors change?
Calculating how much a job is worth on the spot might not make sense on its face — it risks upsetting workers, for one — but it’s become common in the gig economy.
Companies are typically tight-lipped about the thinking behind their wage calculators, but you can deduce some of their thinking from research they’ve published. The company that has published most on algorithmically setting job pricing is, surprisingly or not, Uber. In two papers from 2015 and 2018, researchers from the company outline how their “dynamic pricing” algorithm affects the amount of work drivers will take on — and specifically, the impact of surge pricing.
Alongside calculating the distance and time of specific trips, Uber is always calculating…
