Report: What is Postmates paying during the pandemic?
on average, workers are paid just $1.70 per delivery after expenses.
As workers report low pay despite an increase in demand for delivery services during the crisis, Postmates refuses to provide data on their actual payments. Instead, they continue to claim workers can make “up to $25+ an hour” with no proof to show for it. So workers had to take it into their own hands. We crowdsourced data from Postmates workers across the country to understand the reality of what the $2 billion company is paying.
Postmates’ average pay is just $1.70 per delivery — $4.43 in payout before accounting for basic expenses.
We collected daily, weekly, and individual job reports on 831 deliveries by Postmates drivers between April 1 and April 28.
These reports were provided in the form of in-app screenshots from Postmates workers in every region of the US, and 93% of reports came from daily or weekly summaries, providing a robust sample of typical pay across geographies.
10% of reported deliveries were part of “stacked” orders — jobs where Postmates adds on multiple orders from the same restaurant for proportionally lower pay. These jobs require workers to deliver to additional customers, so for purposes of this analysis, each delivery in a stacked order is counted as a single data point.
Here’s what we learned:
On average, Postmates paid just $4.43 per delivery. (The median pay per delivery was $4.27.)
Almost half of all reported deliveries — 43% — paid less than $4.
The average job includes 4.5 miles of driving. Postmates workers have to cover their own mileage expenses — so after factoring in mileage at the IRS rate of $0.575/mile, and the 7.65% additional payroll tax independent contractors have to cover for themselves, the average delivery only provides $1.70 in net pay.
It takes about 28 minutes to complete a typical delivery — meaning after factoring in expenses, Postmates is paying just $3.64 per hour spent with an active job. (That’s not even factoring in all the time Postmates workers spend waiting for jobs, starting jobs that get cancelled and pay $0, or trying to contact Postmates’ notoriously unresponsive support.)
Given the low pay, Postmates workers heavily depend on tips — but the average delivery includes just $2.27 in tip, and 35% of orders include no tip at all.
Postmates’ own published rates verify these numbers.
$3.64/hour is a startling figure. And many customers, who pay delivery fees of up to $10 and “service fees” of 20%, will be surprised to learn the couriers actually delivering their food often take home less than $4 of the fees they pay.
But it’s not all that surprising when you look at the way Postmates calculates the rates they pay workers. Their rates vary dramatically by city — but for each job, they pay:
A “pickup rate” as low as $1.20
A “dropoff rate” as low as 70 cents
A per-minute “wait time” rate of 7 cents per minute, which covers only wait time in restaurants (not drive time or any additional time spent delivering)
A mileage rate as low as 43 cents per mile, which covers only miles driven from the restaurant to the customer (not miles driven to restaurant, or returning from dropoff locations to hot spots with available jobs)
The 7-cent-per-minute wait time rate is the only component of Postmates’ algorithm that’s consistent across cities — and it’s a transparent example of the company’s willingness to pay below minimum wage: it comes out to just $4.20/hour. On top of that, Postmates caps per-minute wait time pay at 25 minutes — even if the order takes longer than that.
Postmates’ mileage rates vary dramatically across cities — but in some cities, the rate is actually less than the IRS mileage reimbursement rate of $.575/mile, which means drivers are actually losing income with every mile they drive.
For example, check out the rates in Portland, Maine:
For a fairly quick job — 10 minutes of wait time, two miles driven between the restaurant & the customer — Postmates would pay $2.90 for pickup/dropoff/wait time, plus $1.10 for mileage (below the IRS rate).
There are several factors that have reduced Postmates workers’ pay during the crisis.
1. Stacked orders
Postmates frequently pushes extra deliveries onto workers after they’ve already accepted a single job from a given restaurant. Instead of delivering one order, workers are required to take two, three, or even four orders from the same restaurant — for proportionally less pay. Postmates uses this mechanism to reduce their labor costs regularly — but in the last couple months, stacked orders have become even more frequent. This is partly because it’s a cheap way to respond to increased demand — customers don’t pay less, but Postmates gives workers less money and pockets the difference. And it’s partly because Postmates has been running “free delivery” promotions with a number of restaurants, like Chipotle — so they subsidize the cost by adding in more deliveries with less pay.
In fact, our data sample showed that stacked orders paid, on average, 43% less per delivery than single orders.
Workers taking stacked orders receive a “dropoff fee” and per-mile pay for the additional customer — but regardless of whether they’re making one delivery or four, they receive only one “pickup fee,” where the bulk of their earnings come from. And Postmates doesn’t pay for workers’ return trips at all — so a “stacked order” that sends them five miles away means an extra five unpaid miles to return to the neighborhood they work in.
Stacked orders also create longer wait times for customers, who typically pay the same amount for their delivery even though Postmates is paying the worker less. That means long wait times & cold food for customers, and lower tips and customer ratings for workers.
2. No reimbursement for time spent on cancelled orders
Workers are seeing increasing numbers of cancelled orders due to restaurant closures. Many workers report that Postmates has not accurately updated restaurant listings in their customer-facing app — which means they’re still allowing customers to order from restaurants that have completely closed their doors, well over a month into the shutdown.
When a Postmates worker accepts a delivery from a restaurant that has been closed, they receive $0 for the order — despite spending time and mileage driving to the restaurant, and then calling the customer to ask them to cancel the order. (Postmates workers are penalized for cancelling orders themselves.)
3. Low (or no tips)
Tipping isn’t mandatory — but Postmates’ sub-minimum pay rates per delivery leave workers dependent on tips to make any profit. Many customers are tipping generously during the crisis — but workers have seen tips on average drop over the last month.
Our analysis shows the average job included $2.27 in tip for the month of April — and 35% of orders included no tip at all. Free delivery promotions like those Postmates is offering through their partnership with Chipotle may tend to reduce customer tipping. Many customers are also getting subpar service at no fault of the worker — they’re left waiting for their food longer due to stacked orders and Postmates’ refusal to pay enough to incentivize workers to take jobs.
4. Cutting out the minimum guarantee
In February and March, right as the crisis hit, Postmates started quietly reducing their pay rates. Workers in many cities reported seeing cuts to their mileage & base pay rates. Postmates tweaks their rates frequently — last summer, a major pay cut across the country resulted in up to 30% lower overall pay for many workers, and removed language in Postmates’ terms guaranteeing a minimum of $4 per job. (An unofficial $3-per-job minimum was put in place.)
But on March 3, Postmates removed the $3 minimum guarantee entirely, and Postmates workers started seeing orders for as low as $2.
What does it all mean?
It’s common sense: the work of driving to a restaurant, ordering food, and delivering it to a customer should pay a lot more than $4, especially when workers cover all the costs of doing business themselves.
And there’s increasing public support for the concept that essential workers now should be getting hazard pay in addition to a reasonable baseline wage. Workers should be getting paid more in the midst of a pandemic that makes their job inherently dangerous, particularly given that Postmates couriers aren’t provided with access to sick leave, PPE, or other basic safety standards like no-contact delivery. (More info here.)
Increasing reliance on delivery services, large numbers of unemployed workers seeking income, and new partnerships with restaurants that have shifted to pickup-only models have given Postmates the opportunity to increase their profits at workers’ expense. Rather than providing additional pay for additional risk, it appears Postmates is seizing on the crisis as an opportunity to fulfill more orders while minimizing labor costs.
Postmates workers are speaking out.
From Wednesday, April 29 to Friday, May 1, Postmates workers across the country are taking action with a #GuacOff to demand hazard pay & other essential protections. If you think essential workers deserve better during this crisis, stand with Postmates workers by signing on to the #GuacOff here.
We also continue to collect data to monitor how Postmates & other apps are paying during the crisis — if you are a gig worker, please submit your data for our report here.