The implementation of a $20 minimum wage law in Seattle, Washington has faced significant backlash, resulting in a decline in customer orders for delivery services.
The Seattle City Council is currently deliberating on whether to approve a new legislation that would modify the existing PayUp bill, which was implemented in 2022.
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The PayUp law guarantees gig workers, including delivery drivers for local restaurants and platforms like Uber Eats and DoorDash, a minimum wage. According to PayUp, delivery drivers earned $26 per hour, excluding mileage and tips.
Under the new proposal, gig workers would receive a minimum wage of $19.97, which aligns with Seattle’s minimum wage. Additionally, they would be entitled to a per-mile minimum payment of $0.35. However, this provision has sparked concerns among many, as gig workers may still struggle to earn a living wage.
Danielle Alvarado, the executive director of Working Washington, expressed her opposition to the proposal, stating that it aims to bring the industry back to sub-minimum wages.
The implementation of the PayUp bill resulted in additional charges for customers on app deliveries, causing a notable decrease in customer demand. However, its purpose was also to safeguard delivery drivers who often have to bear additional expenses such as gas and vehicle maintenance out of their own pockets.
According to Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, the proposed revisions would maintain a guaranteed hourly rate for drivers. However, some advocates argue that when considering additional expenses faced by gig workers, these changes could ultimately have a negative impact on their overall earnings, as reported by Newsweek.
According to DoorDash, there has been a noticeable decline in orders within Seattle over the past three months, resulting in 300,000 fewer orders. This decrease is believed to be connected to the city’s minimum wage regulations and their effect on consumer prices.
According to a statement from DoorDash, it is evident that the new law is not functioning effectively. DoorDash expressed that the longer the law remains in place, the more detrimental it becomes. However, DoorDash finds hope in the compromise proposal presented by Drive Forward. They believe that this proposal, currently under consideration by the City Council, has the potential to make food delivery more affordable for consumers and help merchants and Dashers regain the millions of dollars in lost revenue in Seattle.
According to Uber, there has been a 30 percent decrease in delivery orders in the weeks after the law was passed.
“Ensuring the protection of gig workers holds significant importance,” emphasized finance expert Michael Ryan, founder of michaelryanmoney.com, in an interview with Newsweek. “However, the existing repercussions have been quite harsh for all parties involved. This is precisely why the city council is currently contemplating the possibility of reducing certain wage requirements.”
The new law is expected to be voted on by May 21, and its potential financial impact on restaurants, employees, and customers has everyone eagerly awaiting the outcome. Amendments may also be made to the law before it is officially passed.
Seattle and other major cities are currently grappling with the challenge of implementing minimum wage policies that strike a delicate balance between meeting the financial needs of employees and safeguarding the local economy, according to Beene.
According to Beene, there is a consensus that these workers should be paid higher wages than what they currently receive. However, it is challenging to determine the exact amount employers can afford to pay while still remaining profitable. Beene agrees with advocates who are urging employers to be more transparent about their financials in order to understand where all the charges to the customer are going. This transparency is crucial in order to assess the validity of the claim that employers cannot pay higher wages.
