Grocery Delivery Services Affect Labor-Leisure Decisions

Delivery services such as DoorDash and Instacart, which have grown rapidly in the past decade especially with COVID, allow for a more precise labor-leisure tradeoff. Households no longer need to dedicate time to weekly grocery runs or interrupt what they are doing to prepare or pick up meals. These services let individuals reallocate time toward paid work or leisure activities when they value their time more than the delivery fee.

Food delivery has existed for decades in limited forms such as pizza or local Chinese restaurants, but this changed with the launch of Postmates in 2011. For the first time, almost any restaurant could offer delivery without hiring dedicated drivers. DoorDash and UberEats soon followed. Instacart, founded in 2012, brought the same idea to groceries, again removing the need for stores to employ their own delivery staff. Since then, most major food delivery apps have expanded into grocery delivery, and many grocery stores now offer their own pickup systems. Grocery delivery services typically charge a fee of about 5 percent.

What makes these services particularly interesting is that they allow households to outsource one-time tasks at a low cost. Previously, outsourcing household labor usually required large fixed costs or repeated commitments, making it difficult for many households. Examples include hiring a nanny, housekeeper, assistant, or landscaper. Grocery shopping falls into a category that is neither traditional work nor leisure, yet it must be done. Delivery services allow individuals to avoid this task once without needing to make a repeated commitment or incur fixed costs.

This makes the choice between labor and leisure more salient. If a person values their time more than the effective cost of outsourcing the chore then they should pay someone else to do it. To make my point clearer, the average American household spends about $6,000 per year on groceries (BLS 2024). An alternative measure is about $3,860 per person (USDA 2024). Suppose the average American household makes one grocery trip per week and each trip takes one hour from door to door. That is 52 hours per year spent grocery shopping, more than a whole work week! Grocery delivery for the entire year may cost roughly $820 ($300 in service fees and a generous $10 tip per trip). This implies that if a person values their time above $15 per hour, paying for grocery delivery is the rational decision.

Individuals valuing their time above $15 per hour shouldn’t go to the store! Instead, they should spend more time on leisurely activities or, more interestingly, there is an arbitrage opportunity. Anyone earning at least $15 per hour who can pick up extra hours could work instead of grocery shopping and come out ahead. The higher the hourly wage, the better the arbitrage opportunity becomes and the less reason you should go to the grocery store.

I am clearly simplifying the situation. Substitutions can be incorrect, there are personal preferences when selecting items like produce, and not everyone views grocery shopping as work as I do, but the broader point remains. These services allow households to bypass chores that fall in between work and leisure and in doing so they create a more precise choice over how time is spent. Such services change how households allocate time and allow individuals to buy back small amounts of time on demand.