A new bill introduced by Seattle City Council President Sara Nelson on April 19 could gut worker protections and minimum pay for thousands of app-based delivery drivers.
In 2022, after advocacy from worker rights organizations, the Seattle City Council passed the “PayUp” ordinance mandating minimum compensation rates for delivery drivers who work for large app-based delivery companies like Uber, DoorDash, Amazon Flex and Instacart. The regulations, which went into effect Jan. 13 of this year, require companies with at least 250 delivery workers internationally to pay them a minimum of $0.44 per minute and $0.74 per mile while working on orders in Seattle. This balances out to $26.40 an hour. PayUp also requires app companies to provide wages on a per delivery offer basis, mandating a minimum of $5 per offer.
While app corporations say the law harmed sales, many delivery workers have seen their net incomes rise significantly since the law went into force.
App-based delivery drivers and bike couriers are part of the new, post-Great Recession gig economy in which traditional full-time work has become casualized. The rise of apps like Uber and DoorDash has coincided with both increased flexibility for delivery drivers — who are treated like self-employed freelancers as opposed to employees — and a massive erosion in labor rights, protections and pay. In response, cities like Seattle, New York and Minneapolis have all imposed regulations guaranteeing minimum pay rates, paid leave and other benefits.
Cutthroat lobbying
App corporations have interpreted these laws as an existential threat to their business model, deploying a variety of lobbying tactics to stymie new regulations. In an April 2024 report by the National Employment Law Project, researchers found that companies like Uber and Lyft spent hundreds of millions of dollars to “buy, bully and bamboozle” local and state governments into not passing increased labor regulations.
Following the implementation of Pay-Up, companies announced higher fees on delivery orders within Seattle. Uber Eats introduced a $5 per order “Local Operating Fee,” while DoorDash enacted a $4.99 “Seattle Regulatory Response Fee.” In an April 23 statement, DoorDash wrote that it estimated it will receive 1.7 million fewer orders in Seattle over the course of 2024 as a result of the increased fees. In March, the company spent more than $130,000 on lobbying against the implementation of PayUp.
While app corporations say the new $5 fee is meant to offset increased labor costs, some delivery drivers disagree. Wei Lin, a delivery driver who works for Gopuff, said the companies were misleading consumers into thinking the new regulations required increased fees.
“The corporations passed the fee to customers, and they used propaganda announcing things like ‘Oh, we have to support this decision, and we have to pass the fee,’” Lin said. “This is such a lie because, first of all, the law never asked corporations to pass on the fee to customers. Second of all, the fee never comes to drivers. We never get the money.”
Nelson’s bill, dubbed CB 120775, is meant to address the concerns of the app companies, effectively neutralizing PayUp. It would cut minimum pay from $26.40 to $19.97 an hour, Seattle’s minimum wage. It would also roll back a host of other regulations, including barring the city’s Office of Labor Standards from being able to collect nonenforcement-related information from app companies, such as the number of gig workers they have and the availability of offers.
One of the major proponents behind Nelson’s legislation is Drive Forward, a 501(c)6 business league organization. While the group purports to represent gig workers, it receives its funding from app corporations like Uber. According to the Seattle City Council’s visitor log, Drive Forward executive director Michael Wolfe met with Nelson, along with other council members and staff, seven times between February and April 2024. The Seattle Times reported that Wolfe and Drive Forward were heavily involved in the drafting of CB 120775.
At the public comment period of an April 25 Seattle City Council governance committee meeting, Wolfe said lost business necessitated the reform of PayUp. “The data says hundreds of thousands of less orders,” Wolfe said “The data says millions in lost revenue for Seattle merchants. And the data says that drivers who are doing on demand [and] couriers who are doing on demand are making less per online hour.”
Workers see success
However, even as companies like DoorDash say they lost hundreds of thousands of orders, many gig workers have benefited from the PayUp ordinance. Alex Kim, a delivery driver for multiple apps including DoorDash and Uber Eats, has seen his gross wages almost double under the new policy, transforming his quality of life.
“My pay has gone way up. My stress levels are way down. I can go to a restaurant if the orders are not ready, and I don’t mind waiting anymore, because I’m just gonna get paid for that time anyway,” Kim said. “So it just feels so much better. I really enjoy my job nowadays.”
Kim added he thinks the PayUp ordinance could lead to safer driving and parking behavior, as delivery workers less pressure to fulfill as many orders as possible.
For Lin, since the implementation of PayUp, he has been able to earn more and work fewer hours, which he says has led to a better work-life balance. However, he believes Gopuff is still throttling his pay by bundling multiple deliveries together in a single offer.
Arianna Riley, a delivery driver with Amazon Flex and DoorDash, said she makes significantly more than she did prior to PayUp.
“I’ve been averaging like the bare minimum would be 23 bucks an hour before expenses,” Riley said. “The highest would be around 30. … Before I would work in Seattle and struggle to make even $20. So I’m definitely making more, and I’m happy.”
While Riley thinks app companies are retaliating against Seattle for passing the minimum pay regulations, ultimately the $5 fee is worth it if it means a living wage, and she says most of her customers have been willing to pay it.
One group of workers who haven’t seen gains due to PayUp are bike couriers. According to The Stranger, some bicycle delivery workers say that apps have prioritized delivery drivers over them since the law took effect. Instead of gutting pay, Kim suggested that the city council should look into protecting bike courier rights instead.
“A lot of the orders that typically would be given to bikes first are no longer being given to bikes first,” he said. “So maybe there could be some kind of legislation around not favoring cars over bikes.”
Lack of transparency
Even before PayUp was implemented, Seattle tech worker Antonio Aguilar Gomez was finding delivery to be increasingly unaffordable. Since January, he hasn’t ordered at all, instead opting to visit restaurants in person. He said he thinks that app corporations’ business model is unsustainable.
“They’re trying to drive up their margins so it’s getting more expensive for us, the restaurants are getting paid less,” Aguilar Gomez said. “Their business model isn’t really scalable and the only way that it is scalable and making sure that the drivers are getting paid is for it to be this expensive. If it’s this expensive and the drivers are getting a living wage, then I am all for it. It is just not within my economic means to be using the app all that much.”
Part of the problem for consumers and workers alike is that it isn’t clear how much of the new fees are actually going directly to pay delivery drivers. In a sample of DoorDash orders since January, the labor rights advocacy organization Working Washington found that the company charged customers and restaurants on average $21.10 per order. Almost a quarter of this is the $4.99 regulatory response fee. The group said only 52.5% of the fees, or about $11.07, actually made its way to the delivery worker. Furthermore, Working Washington estimated that even without the new fee, DoorDash would still make a significant margin.
In its Q4 earnings report, DoorDash announced more than $1 billion in profit in just the last three months of 2023 alone. During that same quarter, Uber reported $1.4 billion in profit.
Even between various delivery apps, the same order could see dramatically higher markups. To test out these differences, Real Change loaded up an order for a Big Mac meal, six chicken nuggets and an M&M McFlurry from the McDonald’s on 3rd Avenue and Pine to its offices in Pioneer Square. For all four apps tested, the subtotal was $26.84. The total cost for the order with Grubhub was $41.79 including $11.02 in fees, while DoorDash offered the same order for $40.57 with $10.01 in fees. Meanwhile, the McDonald’s app only charged $36.43, including $6.17 in fees. The most expensive option by far was Uber Eats, which charged $51.56 with a whopping $19.88 in fees.
Kim said the discrepancy between Uber Eats and the McDonald’s app was staggering given that they are essentially the same service and delivery drivers get paid the same for both.
“So Uber is adding a huge amount into those service fees for some reason,” Kim said. “If you do a delivery order on the McDonald’s app, the fees are actually quite reasonable. It’s not that much money, which is interesting because they subcontract through Uber Eats. So it’s basically the same experience as Uber Eats.”
In addition to large differences in fees, Uber Eats was the only app to not have an option to tip upfront before an order is placed. This appears to be an ongoing practice of the company, which also removed upfront tipping in New York after the city instituted its own minimum pay regulations. When Real Change loaded up an Uber Eats order in Portland, Oregon, the app prompted the user to add a tip before payment, a feature that appears to be missing in Seattle.
In an email to Real Change, Uber spokesperson Zahid Arab did not answer questions about the lack of upfront tipping and discrepancies in cost between the Uber Eats and McDonald’s apps. Instead, Arab wrote that the PayUp laws have increased the cost of doing business in Seattle, prompting the company to impose the local operating fee resulting in 45% fewer orders and increased wait times for delivery drivers.
With CB 120775, the new Seattle City Council will face its first deeply controversial piece of legislation that pits workers against big business. Which side it falls on could signal the direction of city politics for the next two years. The ordinance could be passed out of committee as soon as May 9 and see a full city council vote on May 21.
Guy Oron is the staff reporter for Real Change. He handles coverage of our weekly news stories. Find them on Twitter, @GuyOron.
Read more of the May 1–7, 2024 issue.