New York and Seattle take over a small portion of the apps business.
New York and Seattle have a new wage increase requirement for gig workers by ratcheting up fees and the food delivery apps have responded to it. At present they are dealing with frustrated consumers, increasing restaurant orders and a massive inflow of delivery drivers.
Customers and employees were irritated with apps that increased fees to offset wage increases in Seattle and New York.
New York is one of the places where pay for delivery drivers has increased. The lawmakers in the city say that the changes have benefited the workers well. Seattle which on the other hand implemented the same rules this year. Upcoming plans to roll them back because of “outcry from drivers and restaurants over its devastating” impact, Seattle City Council President Sara Nelson said.
The businesses of the delivery companies depend on the gig workers who they do not employ full time and say that they can only afford to pay so many workers under the two cities’ latest pay standards. The cities expect the companies to pay delivery partners minimum hourly wages based on their time. They also want the companies to reward the most efficient workers.
New York City now mandates businesses to pay couriers at least $19.56 per hour before tips, up from an average of $5.39 per hour before the laws were implemented in December.
In Seattle, Uber Eats saw a drop in orders by 45% in their last quarter from the same period. But just a year earlier the business imposed a $4.99 fee on each order to blanket the city’s new pay requirements. Demand also dropped in Uber and DoorDash in New York City.
New York and Seattle take over a small portion of the apps business. According to DoorDash the new law altogether led to a reduction of some 1% of its overall orders in the first quarter. Analysts say the bigger concern is a wave of similar legislation could roll through more cities and states.
Ro Singh is a Seattle based researcher who was in a regular habit of ordering several times a week to the point the city adopted its pay measure in January. He said that app prices have become insanely high after the varying delivery fees being added with additional tipping charges. “It’s like double the price to order a $20 burrito now” compared with the pickup price, he said. “This is insane.” Due to this he started picking food for himself over ordering.
Consumers will see a rise in prices in all aspects as the wages for drivers increase. After months of discussions and threats to quit the state entirely, Uber and Lyft reached an agreement with Minnesota on new wage rules for ride-share drivers. The additional costs will be passed and affected on the consumers as new fees.
Old disagreements about how drivers are classified have resurfaced in Massachusetts and California, putting additional strain on the companies’ bottom lines and influencing how consumers pay for rides and deliveries.
The State Supreme Court in California is hearing arguments against a 2020 landmark ballot measure which permits the companies to avoid classifying their drivers as employees.
The new rules applied in Seattle and New York City to food delivery couriers and ride hailing drivers are not covered. DoorDash and Uber said that paying a limited number of workers under the new laws is affordable by them. To make the new rules work for the companies, Uber in New York City had to categorise their delivery drivers into shifts. This action has raged the driver who preferred the flexibility and work as per their convenience.
Dara Khosrowshahi, the Chief Executive of Uber said that the company was forced to cut down 25% of the delivery drivers who were at one point working for the app in New York City previously.
Although the New York authorities believe that the new rules have been proven to be good for the market. In April, the agency said the apps were paying workers $16.3 million more a week, more than double what they paid before the changes went into effect.