It may be a rich person’s world, but there are still things that governments can do to enhance the balance. Large cities have led the charge; for example, New York and Seattle have now implemented wage increases for delivery drivers. Drivers in New York City receive at least $19.56 an hour, while those in Seattle earn $19.97 at a minimum.

But the trend is not limited solely to major metropolitan areas. Other cities and regions across the country have been carefully considering passing similar laws, to allow workers to achieve a minimum standard of living, while also improving working conditions. Such goals seem pretty basic and universal, but not everyone is happy about pursuing them.

In particular, food delivery companies like DoorDash have claimed that the new rules force them to adjust their pricing strategies, raising service fees so that they can shift the burden of the wage increases to consumers. For example, Uber Eats has added a $4.99 surcharge to all orders placed in the Seattle area.

Noting these higher prices (which come on top of rising costs for many food orders already), many customers have stopped ordering food deliveries, or at least cutting back substantially. Uber reported a 45 percent drop in orders in the same Seattle metropolitan area after the new charge went into effect. Some consumers opt to pick up the food themselves; others simply choose to dine in more often. Thus, the delivery platforms have experienced significant declines in orders in these cities.

The effects then spread throughout the supply chain. Restaurants—many of which have grown accustomed to and dependent on the revenues earned through delivery orders—are suffering reduced sales to consumers who decide to cook at home. At the same time, the delivery platforms are instating higher charges for them to appear on the sites. Thus, many small, independent restaurants have struggled to remain open, or at least chosen to eschew the apps to avoid the associated costs.

As sales continue to drop, drivers are finding it harder to keep their delivery jobs. Without consistent work, even the higher wages might not be sufficient to enable them to make a good living. For those drivers who remain, new pressures coming from the restaurants make the job harder for drivers, including longer wait times for orders.

In the long-term though, it may be the food delivery platforms and the service firms that maintain them that stand to lose the most. Diminishing ranks of both drivers and restaurants undermines their service consistency, which lowers their appeal to an already dwindling customer base. Meanwhile, their profit margins have shrunk, despite their efforts to pass along the costs to their restaurant partners or customers.

For the market to recover, some creative approaches, by both companies and legislators, may be necessary. Seattle reportedly is reconsidering its wage increase; companies are revising their operational strategies in search of more sustainable models. Perhaps these experiments and the innovations they produce will end up setting the standard for future, effective, livable wage-setting practices across the country.

Discussion Questions

1. What should the minimum wage for delivery drivers be, in your opinion?
2. Why are major cities the first to introduce minimum wage regulations?

Sources: Preeta Rana, “Delivery Drivers Got Higher Wages. Now They’re Getting Fewer Orders,” The Wall Street Journal, June 22, 2024; Lumida News, “Higher Wages, Fewer Orders: The New Reality for Delivery Drivers,” June 23, 2024; OpenAI ChatGPT, “Assistance with Research on Delivery Driver Wage Impacts,” ChatGPT, July 25, 2024; PYMNTS, “Delivery Apps See Orders Drop After Wage Hikes,” June 23, 2024.