Seattle’s $26 minimum wage protecting gig workers went into effect on January 13, 2024, but reports claim that breakthrough legislation negatively impacted app-based delivery drivers and food orders, which could soon be reversed.
The PayUp legislation
The PayUp bill enforced a minimum wage for gig workers, including delivery drivers for app-based platforms such as Uber Eats and DoorDash. The drivers made over $26 per hour before accounting for mileage and tips. The bill was quite complex from the start, and it could be reversed just months after it went into effect.
The impact
While it was supposed to support gig workers, the consequences have been dire. Delivery companies introduced additional fees, $5 and up, and the customers pushed back. The decline in orders was noticeable and understandable since the fees and taxes make up around 30% of the orders.
Major decline
Uber Eats reportedly had a 30% drop in orders, while DoorDash had 30,000 fewer orders in the first two weeks after the bill went into effect. In the past three months, DoorDash had 300,000 fewer orders for the Seattle area. Drivers were frustrated, and many concluded that the minimum wage hike backfired.
DoorDash’s statement
As per Fox 13, the company’s statement said that the longer the numbers remain in place, the more damage they cause. The company said that the Drive Forward proposal could increase customer affordability. The City Council is considering the proposal, as confirmed by City Council President Sara Nelson.
The wage is higher than the city’s minimum
The wage of over $26 is higher than Seattle’s regular minimum wage of $19.97, which was already the highest in the US. The hike brought more drivers into the city, but the demands for orders were failing. Numerous reports show drivers now earn 25% to 30% less before the wage hike.
Some drivers are earning half of what they used to
One driver reported that they earned $931 before the wage hike. Now, they make just above $464. Another driver said they made $20 per hour before the wage hike, but they, too, are earning half of what they used to. Since they are working less, drivers are not making enough, they are struggling, and so are others involved.
Making the wage hike that pleases everyone
Seattle is among many cities trying to raise the minimum wage while keeping everyone involved satisfied. It is a challenging task, and most people agree that workers deserve better wages, but it should not negatively impact the whole economy. The difficulties come in the form of raising wages while maintaining profitable businesses.
New York City is not backing down
A similar ordinance in NYC took effect in December 2023, giving couriers $17.96 per hour before tips. Despite the backlash from DoorDash, which stated that wages adversely affect demand, the city is not backing down. NYC’s DoorDash fee is $2.
The NYC officials fired back
DoorDash’s estimation that the company lost 200,000 orders and $3.5 million in the first few months was met with disbelief among city officials. Michael Lanza, a spokesperson for the city’s Department of Consumer and Workforce Protection, commented that there is no evidence that restaurants are losing money.
The situation in Seattle is worse
The independent restaurants reportedly suffer a 40-50% decline in orders. Some residents of Seattle are significantly affected, like older or people with disabilities, who can no longer afford to order their food. The Mayor’s spokesperson said the office is open for improvements. The Seattle City Council has delayed a vote on proposed changes to new rules for food delivery drivers.
There are options
While Seattle is carefully crafting its next move, some people saw opportunities. A gig worker started his company, Tony Delivers, with more affordable options for disappointed customers. The first-in-nation legislation opens entrepreneurial opportunities, the Tony Delivers owner said.
The nation is watching
The wage hike had unintended consequences, which could help other cities and states in future wage increases. Meanwhile, a union-backed group, Washington Works, said that big organizations always try to convince lawmakers that higher wages harm businesses. They said it was an unreasonable argument, adding that higher wages benefit everyone.
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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.