New York City has set a minimum wage for the delivery drivers affiliated with apps like Grubhub and DoorDash of $17.96 per hour, a move likely to raise the cost of delivered restaurant meals.
The new rate takes effect July 12. The pay floor will continue to climb to at least $19.96 by April 21, 2025, with adjustments made annually in the meantime to reflect changes in the cost of living.
Drivers currently earn an average of $7.09 an hour, according to the office of New York Mayor Eric Adams. That amount is below the federal minimum wage of $7.25 per hour and less than half the city’s pay floor of $15 an hour.
Services like Uber Eats will have a variety of ways of meeting the new mandate. The platforms can pay their drivers either per trip, per hours worked or in accordance with a system they develop, as long as the runners end up with the prevailing minimum.
Any model has to reflect the time workers spend on call, waiting for an order to come their way. That provision would require a higher wage from companies that pay per trip, the mayor’s office noted. It pointed out that about 40% of a deliverer’s time is spent waiting for an order.
Adams said that flexibility in determining deliverers’ pay makes New York City’s new regulation the first of its kind in the nation.
Seattle set a minimum wage of $17.27 an hour for delivery drivers about a year ago.
Adams’ office and New York City’s Department of Consumer and Worker Protection (DCWP) set the new rates in accordance with a law passed by the City Council in September 2021. The legislation required the Department to study the situation and recommend a minimum wage for third-party deliverers.
The city estimates that the minimum will affect the incomes of some 60,000 local gig workers.
“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,” the mayor said in a statement.
The DCWP initially recommended that a minimum wage of $23.82 an hour be set for the drivers and bike riders. It argued that the amount essentially raised the workers’ pay to $19.86 an hour, with another $3.96 tacked on to cover their insurance costs and other expenses.
DoorDash immediately responded to Sunday’s wage announcement with a statement asserting it was not opposed to setting a minimum wage for its deliverers but found the New York threshold to be “extreme.” It said it would pursue all means to block adoption, including litigation.
New York’s move comes as some restaurant chains report that consumers are cutting back on delivery because of the high fees their meals carry.
“Let's just be honest, the third-party delivery occasion is very expensive,” First Watch CEO Chris Tomasso said in reporting first-quarter results for the daytime dining chain, according to a transcript from the financial services company Sentieo. “And it doesn't surprise me that that's where we see [cutbacks]—and not just with us, by the way. It's a discretionary occasion.”
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