How DoorDash’s New Payment Scheme Is Really Playing Out
Would you run an errand for just two bucks? How about $3? Maybe $4? These are the questions many delivery workers for the courier service DoorDash say they now face after the company instituted a new pay model paying out as little as $2 per job—a system that was meant to replace its previous, predatory wage model. And thanks to upcoming changes to the company’s reward program, frequently working for scraps may be some dashers’ only option.
Back in August, amid ongoing backlash, DoorDash CEO Tony Xu announced in a blog post that the company would finally bend to public pressure over its controversial tip-skimming model. Xu claimed at the time that after a wide rollout of this new system in September, dashers would earn higher wages on average. But dashers who spoke with Gizmodo after Xu’s proposal for the overhauled pay model said that they worried that the range for base pay per dash—from just $2 up to $10, according to Xu—could potentially reduce per-delivery earnings. And even though the system began rolling out to dashers in September, the jury’s still out.
What’s clear, however, is that even under a system ostensibly intended to better pad the pockets of DoorDash’s delivery workers, pinning down exactly how DoorDash determines who makes what is still largely a mystery. Three current dashers who spoke with Gizmodo on the condition of anonymity to protect their jobs—as well as dozens of dashers in private and public forums—say that since getting the new model update, they’ve seen a wave of $2 or $3 orders in place of minimums that used to be as high as $5 or more. Those dashes, which represent some of DoorDash’s new per-dash payouts, hardly cover gas let alone rent.
Multiple dashers told Gizmodo that they’ve become more selective about which orders they choose to accept in order to boost their wages. But DoorDash has begun testing methods that appear designed to drive dashers toward lower-paying orders by stripping them of perks if they don’t accept enough of the chaff that comes their way.
Based on interviews with several current and former dashers as well as internally distributed correspondence about its new system, it appears DoorDash would rather devise seemingly intentionally convoluted wage models and potentially manipulative systems than simply pay its independent contractors a living and reliable wage for their labor.
If you’ve ordered through DoorDash before, you’re probably familiar with the tipping system baked into the app. On the checkout screen, users are prompted either to tip with a pre-filled dollar amount or, in some cases, a percentage of the total. (Customers can, however, manually enter “0” to leave no tip or tip in cash.) Under DoorDash’s old system, and depending on whether and how much someone tipped, the company could get away with paying its couriers as little as $1 per order while customers’ in-app tips paid the remainder of workers’ promised wages.
Here’s how DoorDash managed to pull off its old scheme: If the promised amount for a particular dash was, say, $7, and a customer tipped $5 on the order, DoorDash would apply that tip toward the promised wage and pay the difference, just $2. So, while the dasher did, technically, get to keep 100 percent of their tips, as the company messaging went, they also dictated how much DoorDash was on the hook for in terms of per-delivery payouts and limited the ability of dashers to earn tips on top of what DoorDash paid them.
Dashers regularly lamented their frustration with this system through public and private channels, particularly as many customers seemed unaware that their tips were making up a part of a worker’s wage rather than supplementing it. After all, when customers tip, they reasonably assume that tip is something extra that the worker will earn in addition to—rather than instead of—their base income.
According to Xu, DoorDash’s new wage model would be made up of a base pay—the guaranteed amount DoorDash would pay for the delivery—customer tips, and any promotional bonuses (like “peak pay,” a bonus paid to deliver during specific hours, or so-called “challenges” and earning a “top dasher” distinction). With regard to tips, the new model would include them in addition to base pay rather than in place of any amount above $1. The range in base wage, from $2 up to $10, would be determined based on various metrics like delivery duration and “desirability,” according to the company. Xu said in the August blog post that deliveries “that are expected to take more time, that require Dashers to travel a longer distance, and that are less popular with Dashers will have higher base pay.”
Notably, Xu said that under the new system, “base pay from DoorDash to Dashers will increase.” But given the fact that in many cases DoorDash was paying a mere $1 of its own money to its couriers, depending on what the customer tipped, even a $2 payout per delivery would technically be a 100 percent increase from what it was paying its workers for many deliveries under the old model. But Xu also claimed that under the new system, DoorDash workers would “earn more money on average—both from DoorDash and overall.” In recent emails to dashers reviewed by Gizmodo, DoorDash said it would be “working with a third party to validate this,” though who or what that third party might be was not stated by the company and DoorDash did not respond to Gizmodo’s request for clarification.
Current and former dashers who spoke with Gizmodo following the announcement were understandably skeptical about these lofty assurances of more money. One dasher said that while the promise of a new and improved pay model looked good on paper, he was “waiting to see what kind of tricks they’re going to pull.” This dasher told Gizmodo that he worried that in his market, where the estimated average base wage was around $4 or $5 per dash, he would see his normal earnings halved to $2—a wage that hardly justifies gas in the event that a customer doesn’t tip or tips poorly. Plus, due to the nature of the work, and because they are independent contractors, dashers also need to consider additional costs like wear and tear on their vehicles, insurance, and other expenses.
One former courier for the company, who spoke on the condition of anonymity to avoid jeopardizing his other gig work, said that while the announcement seemed like “a step in the right direction for DoorDash to pay drivers to do the job they were assigned, it would be foolish to think that these changes stem from DoorDash’s desire for altruism.”
In late August, shortly after the publication of Xu’s blog post, Gizmodo reached out to DoorDash to ask who this supposed hike in earnings would apply to and whether it would take effect in every market. Gizmodo also asked how the company defines “on average,” as one former DoorDash worker on the corporate side told Gizmodo earlier this year that the company has in the past fudged “averages” for earnings by using a small pool of data to represent a larger population in its ads for dasher jobs. In a statement by email, a DoorDash spokesperson told Gizmodo the changes “will apply to all Dashers, across all markets.”
“We expect the new model to have greater variability so to offset this, DoorDash is increasing the amount that we pay on average through base pay and bonuses,” the spokesperson said. However, dashers who have received the new pay model in their area told Gizmodo this is not necessarily the case.
One dasher in the St. Louis market who’d had the new system for weeks when we chatted described the first day of dashing with it as “extremely rough,” with orders of mostly $2 and $4. Under the new system, and until customers are able to tip in-app after their order is placed—which they cannot currently do despite the company promising this feature, according to dashers who spoke with Gizmodo—the number shown to dashers when they accept an order generally represents the total of what they’re getting for that dash. (Unless, of course, a customer tips in cash.)
“It was not a good first day,” he said. He added that it’s since gotten better, and fewer of those bottom-of-the-barrel $2 or $3 dashes have been surfacing while he’s on shift. But he’s also found that cherry-picking is key……..Read More>>