In 2022, the Seattle City Council passed an ordinance mandating a minimum living wage for drivers who deliver food via apps in the city. The law finally went into effect in January 2024, but so far the main result has been customers mass deleting delivery apps, plummeting food orders, and plummeting driver wages.
The ordinance, part of a legislative package called “PayUp,” was passed with the aim of protecting gig workers. By setting a compensation plan for app-based delivery drivers based on miles driven and amount of time worked, the ordinance functions like an (extremely complicated) minimum wage.
The salary threshold is based on labyrinthine calculations: drivers’ “employed minutes” are multiplied by an “equivalent minimum wage rate”, which is then multiplied again by an “associated cost factor” and then multiplied again by an “associated time factor “..” Next, this sum is added to the drivers’ total “committed miles”, multiplied by the “standard mileage rate” and then multiplied once again by the “associated mileage factor.” – the text of the ordinance itself literally does the math for you).
Heralded as a “first-of-its-kind” legislative breakthrough when it passed, the ordinance’s first two months of operation provided a grim lesson in real-world economics. First, delivery companies were forced to add a $5 fee to delivery orders in the city to cover the sudden increase in labor costs. Right on cue, reports began to emerge of $26 coffees, $32 sandwiches, and $35 Wingstop orders where taxes and the new fee accounted for nearly 30% of the total.
Local news station King 5 reported that Seattle residents have begun deleting their delivery apps from their phones in response to the rise in exorbitant delivery prices. Uber Eats saw a 30% drop in order volume in the city, while DoorDash reported 30,000 fewer orders in just the first two weeks after the ordinance went into effect.
In turn, this decrease in demand has had a direct impact on the wallets of the couriers themselves. A driver who earned $931 in a week this time last year saw his earnings drop by half to $464.81 in a comparative week this year. Another reported consistently earning $20 an hour before the ordinance, only to see his earnings also drop by more than half since it went into effect.
In other words, while the ordinance theoretically raises drivers’ earnings to over $26 an hour – a figure that ironically far exceeds Seattle’s standard minimum wage of $19.97 – drivers barely log any hours at all. due to the drastic decrease in demand for food delivery. As one Seattle driver summed it up: “He was dead. The question was dead.” A second driver put it more bluntly: “I have nothing. I’m not going to stand here for hours for a damn order.”
In addition to drivers, those who have been hardest hit include local family-owned restaurants that have seen delivery orders dry up, and even the city’s elderly and disabled population who often depend on affordable delivery options for meals. One would imagine that progressive politicians would be ready to repeal a law that harms workers, local non-corporate businesses, the elderly and the disabled all at the same time, but government officials in Seattle are busy doubling down or dissembling.
A spokesperson for the mayor noted that “should the data show that there have been unintended impacts on workers and small businesses, we will always be open to making improvements” – a criterion that has clearly already been met – but nevertheless clarified that the mayor “still stands “strongly in support” of the minimum wage ordinance.
Meanwhile, the City Council president says she’s “very concerned” about the ordinance’s effects so far — and even claims that “it’s not the job of politicians to regulate companies’ profit margins” — before saying, “I won’t do it again.” all legislation.”
The near future looks even bleaker for customers and delivery drivers in Seattle. After approving the PayUp package, the City Council decided that implementing the minimum income portion of the ordinance would require five new full-time government employees in the city’s Office of Labor Standards (expanding to nine employees by 2027) and $1.2 million per year (rising to $1.56 million per year by 2027). To fund these additional costs, as well as other parts of the PayUp package, the Council voted last November to introduce a fee of 10 cents per delivery, which will take effect in 2025 and is expected to generate $2.1 million in revenue annual. for the city coffers.
While the desire to protect delivery drivers may be based on good intentions, the solutions promoted by progressive politicians too often do more harm than help. If policymakers really want to support app-based gig workers, they should instead enact rules that protect independent contractor status while experimenting with portable benefit models that could actually help these workers.
But given city officials’ reluctance, Seattle residents will likely have to resign themselves to more $26 coffees for the foreseeable future.