Grubhub delivery rider in New York City
New York City Mayor Eric Adams and the New York City Department of Consumer and Worker Protection (DCWP) Commissioner Vilda Vera Mayuga announced a novel initiative to implement a first-of-its-kind minimum pay rate for app-based restaurant delivery workers.
“‘Getting Stuff Done’ for working people is what this administration is all about, and that includes some of the hardest working New Yorkers: our delivery workers,” said Mayor Adams during a press conference Sunday.
“Our delivery workers have consistently delivered for us — now, we are delivering for them. This new minimum pay rate, up by almost $13.00/hour, will guarantee these workers and their families can earn a living, access greater economic stability, and help keep our city’s legendary restaurant industry thriving,” he added.
While the headlines might initially draw applause, a closer look reveals potential unintended consequences and raises questions about the viability of such a policy.
The proposal involves more than doubling the average hourly rate for delivery workers from $7.09 to $19.96, a change touted as a means to ensure economic stability for the city’s more than 60,000 delivery workers.
“The pay rate will be $17.96 when it takes effect on July 12, 2023, and will increase to $19.96 when it is fully phased-in on April 1, 2025,” according to the news release.
“The rate will also be adjusted annually for inflation. Apps have the option to pay delivery workers per trip, per hour worked, or develop their own formulas, as long as their workers make the minimum pay rate of $19.96, on average. Apps that pay workers for all the time a worker is connected to the app (the time waiting for trip offers and trip time) must pay at least $17.96 per hour in 2023, which is approximately $0.30 per minute, not including tips. Apps that only pay for trip time (the time from accepting a delivery offer to dropping off the delivery) must pay at least approximately $0.50 per minute of trip time in 2023, not including tips.”
Though it’s an impressive figure and seemingly noble gesture, such a substantial increase could drastically impact the operations of delivery apps, restaurants, and, ultimately, the very workers it purports to assist.
Delivery apps, already struggling to attain profitability, will bear the brunt of these additional costs. With thin profit margins, these platforms may have to pass the added expense onto restaurants and consumers, potentially resulting in higher prices for customers and decreased sales for eateries. This shift could lead to a reduced demand for delivery services, threatening the jobs of the very workers this initiative aims to support.
“The city is lying to delivery workers — they want apps to fund this increase by eliminating jobs and reducing tipping while forcing the remaining workers to deliver orders faster,” Uber Eats spokesperson Josh Gold told AP.
“Given the broken process that resulted in such an extreme final minimum pay rule, we will continue to explore all paths forward — including litigation — to ensure we continue to best support Dashers and protect the flexibility that so many delivery workers like them depend on,” DoorDash said in a statement.
Moreover, the policy overlooks the fact that delivery work, like many gig economy roles, offers the flexibility that many workers value. By imposing a higher pay rate, it’s possible that these roles will become less flexible, thereby removing one of the key appeals of such jobs.
The city’s announcement highlighted that the new rate was established after extensive consideration of public comments, industry and worker feedback. However, the full scope of this feedback, including any opposition or alternatives suggested, has not been made publicly available. Without transparency on these matters, it is difficult to believe that all viewpoints were sufficiently considered.
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