BRACE FOR PRICE IMPACT: Delivery Workers In NYC To Get Almost $20 An Hour Minimum By 2025

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New York will become the first U.S. city to implement a minimum wage for food delivery workers, as much as tripling the current earnings of the city’s some 60,000 drivers.

Starting on July 12, companies like Uber Eats and DoorDash will be required to pay their delivery workers at least $17.96 an hour for their labor, a sharp increase from their current average hourly rate of $7.09, neither including tips. The new rule, announced Monday by New York Mayor Eric Adams and the New York City Department of Consumer and Worker Protection, also calls for an increase to $19.96 an hour in 2025.

“We owe them a debt of gratitude,” Adams said. “They delivered for us, now we’re delivering for them. It is the right thing to do.”

Food delivery companies immediately pushed back against the new policy, which has been in the works for the past two years. DoorDash, which has the largest share of the U.S. food delivery market by multiple estimates, says it’s considering suing the city to stop the new minimum wage from being implemented.

“Litigation is definitely on the table and something that’s being thoroughly considered,” DoorDash spokesperson Eli Scheinholtz told The Washington Post.

Another popular delivery app Grubhub said in a statement: “Unfortunately, New York City chose not to partner with the industry on a solution that would have benefited all aspects of the gig economy.”

The food delivery apps could pass on the costs in the form of higher delivery fees, which companies warn could drive down demand – and with it the amount of money for workers.

“Given the extreme rate, it’s likely there will have to be some unpopular changes to the platform,” Scheinholtz said. “When we when we really get down to it, this is really going to undermine the very delivery workers that this was sort of intended to help in some respects.”

New York’s new rule does allow flexibility in how companies to pay their workers – they can compensate per trip, per hour worked or a combination of both – but no matter the choice, the earnings must amount to $17.96 per hour.

Food delivery companies will also be required to pay their workers 30 cents per minute when they are “on call” – meaning they’re connected to the app but waiting to receive an order – and 50 cents per minutes when they are on a trip, actively delivering food. The latter rate will increase to 53 cents per minute in 2024 and 55 cents per minute in 2025.

For years, delivery apps have gotten around paying their drivers city-mandated minimum wages by designating them as independent contractors instead of employees. In 2019, DoorDash changed its tipping model after it was revealed that tips given to drivers were being used to subsidize their wages.

The new minimum wage policy still leaves much to be desired in the arena of app-worker protections, said Justice For App Workers, a coalition that represents 120,000 delivery workers across New York and Illinois. Most notably, the coalition is seeking protection against companies like Uber Eats and DoorDash “locking out” delivery workers from using their app to save on costs.

“Workers like using these apps because it gives them flexibility to log-on when they want and work when they want,” said Aadhya Shivakumar, a spokesperson for the coalition. “And the way that the city designed this raise, delivery apps could take away that flexibility with lockouts, taking away the appeal and the way a lot of our workers make money.”

Shivakurmar added that Justice For App Workers met last month with ride-hailing drivers and delivery workers in Chicago to discuss better protections and worker safety, but that talks with Illinois politicians about implementing changes like the new minimum wage in New York are further out.

 


4 COMMENTS

  1. By increasing the mandated wages of the delivery people, and with the delivery company passing on the cost to the consumer, the consumer will rightfully feel that he does not have to give a tip. So who will lose out in the end?

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