Seattle Gig Wage Law Reportedly Reduces Driver Income
Seattle's new gig wage policy is having adverse effects on food delivery drivers, according to a recent report. The policy has reportedly led to lower order volumes and reduced net income for drivers, highlighting the complex economic impact of such regulations on tech platforms.
- The "PayUp" ordinance, officially known as the App-Based Worker Minimum Payment Ordinance, went into effect on January 13, 2024. It mandates that app-based delivery workers be paid the greater of a per-minute and per-mile rate, or a minimum per-offer amount. For 2024, the rates were set at $0.44 per minute and $0.74 per mile, or a minimum of $5.00 per offer. - The legislation was passed by the Seattle City Council in May 2022 and signed into law by Mayor Bruce Harrell on June 13, 2022. It is part of a broader package of bills known as "PayUp" aimed at providing protections similar to those of employees for gig workers, who are often classified as independent contractors. - In response to the ordinance, food delivery companies like DoorDash and Uber Eats added a $5 fee to all orders placed through their apps to cover the mandated labor costs. - Companies have reported a significant drop in order volume since the law took effect. DoorDash reported 300,000 fewer orders, leading to an estimated $7 million in lost revenue for local businesses. Uber Eats noted a 30% decline in order volume. - While the ordinance intended to raise hourly wages to around $26.40 before tips, some data suggests that drivers' net earnings have decreased due to fewer orders and longer wait times between deliveries. One report from Grubhub indicated that when factoring in total online time, drivers are earning on average 36% less than before the law was implemented. - Some restaurant owners have reported a substantial decrease in third-party delivery app sales, with one reporting a drop of nearly 50%. - In light of the reported negative impacts on businesses and drivers, Seattle City Council President Sara Nelson has proposed a new bill, CB 120775, to amend the "PayUp" ordinance by lowering the minimum pay for drivers. This proposal has been met with opposition from some gig workers and their advocates.
