$20 Minimum Wage Results in Hundreds of Thousands of Lost Orders for Restaurants

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A recent legislative move to introduce a $20 minimum wage has sparked significant consequences in Seattle, as many customers have begun to avoid ordering deliveries. 

Seattle Council Rethinks Gig Worker Pay

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Amidst deliberations, the Seattle City Council is contemplating an amendment to the previously enacted PayUp bill from 2022, which established a minimum wage for gig workers, including delivery drivers associated with local eateries and services like Uber Eats and DoorDash.

Is $19.97 an Hour Enough?

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Initially, these drivers earned $26 an hour before other compensations like mileage and tips were added. The newly proposed adjustment offers gig workers a minimum wage of $19.97—aligned with Seattle’s base wage—supplemented by a $0.35 per-mile compensation. 

Concerns Over Sub-Minimum Wages 

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This adjustment has raised concerns about the potential inadequacy of gig workers’ earnings. Danielle Alvarado, executive director of Working Washington, expressed strong disapproval of a proposal aimed at reintroducing sub-minimum wages within the industry. 

The Impact of Higher Delivery Charges


This move came as part of ongoing adjustments to Seattle’s PayUp bill, which increased delivery charges via apps and also led to a noticeable dip in customer orders. 

Although designed to safeguard delivery drivers by compensating for their expenses on gas and vehicle upkeep, the added fees have deterred many users.

Gig Workers’ Out-of-Pocket Expenses


Further modifications suggest that while drivers would receive a fixed hourly wage, the compensation might not sufficiently cover the various out-of-pocket expenses they incur. 

Alex Beene, a financial literacy instructor, highlighted that despite the guaranteed pay, the sum total of additional costs could still negatively impact the overall earnings of gig workers.

300,000 Orders Lost

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DoorDash reported a significant reduction of 300,000 orders in Seattle over the past three months, attributing this downturn to the city’s minimum wage regulations and their effect on consumer prices.

Unintended Consequences

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The company described the new law as problematic, based on feedback from Dashers, merchants, and consumers. They emphasized that the detrimental effects of the law have only escalated over time. 

A Compromise Proposal on the Table


In response, the City Council is considering a compromise proposal from Drive Forward, aimed at enhancing consumer affordability and recuperating lost revenue for Seattle’s merchants and delivery workers.

Similarly, Uber observed a 30% drop in delivery orders shortly after the enactment of the law. 

Protecting Workers Without Hurting Business


Michael Ryan, a finance expert, remarked on the necessity of protecting gig workers but pointed out the harsh impacts the law has had on various stakeholders. 

A Vote That Could Change Everything


The ongoing discussions in the city council include considerations for modifying some wage stipulations to alleviate the negative outcomes. 

With a potential vote on the new law slated for May 21, stakeholders including restaurants, employees, and customers are closely monitoring the situation, hoping for financial relief and regulatory adjustments.

The Struggle to Set Sustainable Wages


Alex Beene highlighted the ongoing struggles faced by Seattle and other major cities in crafting minimum wage laws that address the financial needs of employees without undermining the local economy. 

The Debate Over Fair Wages Continues

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There’s widespread consensus that workers should earn higher wages, yet determining the sustainable limit for employers—balancing profitability with fair pay—remains complex. 

Can Clearer Charges Promote Fairness?


Beene supports the call for greater transparency from employers regarding how customer charges are utilized. Such clarity would help evaluate the validity of claims made by businesses about their financial limitations concerning wage increases.

Customer Fees Diminished Demand


Councilmember Nelson has emphasized the need to eliminate a particular fee, pointing out its role as a key factor in the current economic dilemma. According to Nelson, data from Drive Forward demonstrates how customer fees have diminished demand, adversely affecting earnings for both drivers and restaurants in Seattle. 

Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.