A first-of-its kind law requiring a minimum wage for app-based delivery workers will take effect after a judge rejected the companies’ bid to block it.
Uber, DoorDash and Grubhub won’t be able to get out of paying minimum wage to their New York City delivery workers after all, following a judge’s decision to reject their bid to skirt the city’s new law. The upcoming law, which is still pending due to the companies’ ongoing lawsuit, aims to secure better wage protections for app-based workers. Once the suit settles, third-party delivery providers will have to pay delivery workers a minimum wage of roughly $18 per hour before tips, and keep up with the yearly increases, Reuters reports.
The amount, which will increase April 1 of every year, is slightly higher than the city’s standard minimum wage, taking into account the additional expenses gig workers face. At the moment, food delivery workers make an estimated $7-$11 per hour on average.
Invalids and disabled people use these services too. The problem isn’t they expect it for free, the problem is the people who do the work are not being paid a living wage to do it.
There is a deeper problem that doesn’t get discussed enough: namely, that customer may not actually value delivery enough to pay workers a livable wage. Delivery companies are bleeding money left and right, and none of them are meaningfully profitable. They were riding the money tap from low interest rates for a while, but now that that’s dried up and people are starting to hit their limit of how much they’ll pay in fees for delivery, we’re gonna hit a breaking point, especially as governments start to tighten the rules like this.
Either customers will actually pay enough for this to be a financially viable business, or they won’t. Pretty much every sign has pointed in the negative so far, and the companies are eventually going to run out of money to throw at this. From a teeny bit of research, it seems like the average delivery worker gets somewhere around 3-4 trips per hour. To hit $20 a hour, which isn’t exactly a high wage, each person ordering delivery is going to have to accept adding at least five more bucks or so on top of the cost of their food, and on top of a fee to actually keep the platform itself running, and those engineers aren’t exactly cheap, and even more fees to start paying down the company’s debt (Uber has about 9 billion dollars of debt right now), and even more fees to pay shareholders.
There’s simply quite of lot of cost built into a single delivery trip, and I don’t think the average consumer is really willing to pay it just to save a bit of time and effort getting food. But hey, we’ll see.
Have you ever heard of pizza delivery? Been around for much longer and sooo much cheaper.
It’s similar in some ways but overall a very different business model which doesn’t work out nearly as efficiently.
When you’re delivering pizza, you generally just work out of one location. You have a relationship with the business you’re working at which includes an area set aside for deliveries where drivers can both plan the orders into batches of ones that work well together, considering when they’ll come out of the oven, their destinations, and what the other drivers are doing. When it’s busy, drivers can go in, look over all the current orders (ready or not), and take deliveries to their cars without needing to interact with employees at all. In some locations, they might also be considered kitchen staff and can also do things like pick orders or cook items that aren’t yet ready, allowing them to both provide value to the business (further justifying a wage) and get deliveries out the door sooner.
A lot of that isn’t the case for delivery services. The food pickup can be anywhere, so you can’t just go back to the restaurant and wait, and the pickups need to be optimized just like the dropoffs (if the service even allows you to batch deliveries together). You don’t have that relationship with the business; you’re basically just another customer, so no going to the back to see what’s up or helping the employees when they are swamped.
I’ve done pizza delivery in the past. I didn’t mind it. I don’t think I would like delivering for one of these apps, it sounds like a giant pain in the ass.
Pizza delivery is generally handled by each individual restaurant with some dedicated employees, so it’s a pretty different model than something like Uber Eats. Pizza is also fast, cheap, and simple, so that helps to drive down costs. It’s also generally a complete meal for at least two people, if not a whole group, and so the delivery cost gets split across more people.
I get the comparison, but I don’t think they’re really as analogous as they seem. One is a pizza place hiring a delivery person or two to drive some pizza around; the other is a large tech company settled with debt and inventor obligations paying very expensive engineers to manage incredibly complicated logistics networks and deal with tens of thousands of distinct parties.
This is really kinda my point. Why is pizza delivery so much cheaper? Because it doesn’t have to deal with all these extra costs that a massive delivery network like Uber inherently has to manage. I imagine we’ll eventually hit some kind of equilibrium where a lot of restaurants that can manage it have their own in-house delivery people, while the large networks will have to dramatically downsize or die.
If I take everything you say as true at face value. Then the business was a shitty idea. The owners of the company who have gambled away the VC money should be the ones on hook for it, not the customers.
It is the employer’s responsibility to ensure their workers get paid. Period.
That’s precisely my point. It’s ultimately a shitty business idea, and will probably eventually fail.
I don’t really understand what you mean by being on the hook for it. Investors will ultimately lose quite a lot of money, workers will lose their jobs, and customers will endure the horror of walking or driving a bit to grab food.