The city of Seattle is reconsidering the big wage hike it handed to app-based delivery drivers earlier this year after drivers said it has hurt their earnings rather than helped.
City Council President Sara Nelson told Seattle’s KIRO Newsradio last week that she is talking with drivers and delivery apps about changing the city’s PayUp legislation that raised drivers’ hourly minimum wage to $26.40 on Jan. 13.
“This is an example of legislation that is having unintended consequences that are having wide impacts,” Nelson told KIRO.
The rate includes an hourly base wage as well as 80 cents per mile and coverage of certain expenses. It is well above Seattle’s regular minimum wage of $19.97, which is the highest in the U.S.
Delivery apps including DoorDash, Uber Eats and Grubhub responded to the increase by adding a $5 regulatory response fee to customers’ checks as well as bumping up some of their other service charges, resulting in noticeably higher prices for consumers.
The pay hike also attracted more drivers to the city, which increased supply just as demand for delivery was falling, said Michael Wolfe, executive director of local driver advocacy group Drive Forward.
According to a new survey by the group, drivers are now seeing fewer offers, longer gaps between trips and lower tips. As a result, most are earning 25% to 30% less than Seattle’s regular minimum wage before tips. “It’s made the problem worse,” Wolfe said.
The findings have been supported by data from the delivery apps. DoorDash earlier this month said that in the two weeks after PayUp went live, customers placed 30,000 fewer orders, costing businesses more than $1 million. Grubhub on Monday reported that drivers are now waiting an average of 102 minutes between orders, an increase of 437% compared to before the law was implemented.
Wolfe said he expected the City Council to begin working on new legislation next week, with votes to come in early April. Neither Nelson nor the City Council at large had responded to a request for comment as of publication time.
Drive Forward, which opposed the current version of the law, is proposing a $22.45 minimum hourly wage plus 42 cents a mile.
DoorDash said it would prefer to see the law repealed entirely, though it is willing to work toward a standard that is less costly than PayUp.
“Our message to the Council is the same as the message we’re overwhelmingly hearing from Dashers, businesses and consumers in Seattle–it’s time to fix this broken law,” a DoorDash spokesperson said in a statement.
Washington Works, a union-backed group that pushed for PayUp, said that the wage hike has made gig work more sustainable and contributed to a more resilient economy.
“Corporations are working hard to convince policymakers and the public that minimum wage for workers is a failure—an argument both out of touch with the values of our city and the overwhelming evidence that living wages are good for everyone,” the group said in a statement.
Seattle is one of just a few jurisdictions to mandate delivery-app worker pay in the U.S. A similar rule went into effect in December in New York City, where couriers now earn at least $17.96 per hour before tips.
Like in Seattle, delivery apps in New York have responded with increased fees and other operational changes. Earlier this month, DoorDash said the higher costs were hurting demand, but city officials contended that deliveries have remained steady.
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