New York City Sets New Minimum Wage for Food Delivery Workers

More than any other U.S. city, New York relies on a growing army of delivery workers who have braved repeated waves of extreme weather and toxic air as remote work reshapes the economy. Now, they’re getting a raise.

Starting July 12, New York City’s app-based delivery workers must be paid at least $17.96 an hour, not including tips — the first such minimum wage rate in the country for an industry that has grown in popularity during the pandemic. The increase, which comes nearly two years after the City Council passed a package of bills designed to improve workers’ conditions, was announced over the weekend by Mayor Eric Adams.

Critics say the provision doesn’t do enough to compensate workers who have to absorb a range of costs as independent contractors, including frequent on-the-job injuries. Industry groups argue that the additional costs could stifle opportunities for some workers and pass costs on to consumers and restaurants, which already pay more to use the utilities.

The city’s more than 60,000 delivery workers, who courier takeout, groceries and other items, are paid an average of $11 an hour, less than New York’s minimum wage of $15 after factors in tips and expenses, a city analysis shows. They also cover their own health insurance, business expenses and additional taxes.

The new law, first proposed in 2021, would eventually increase workers’ minimum wages based on inflation to at least $19.96 an hour by 2025.

“This is huge and historic for an entire industry to have no protections,” said Ligia Gualpa, executive director of the Labor Justice Project, the labor advocacy group that introduced the legislation. “This will have a huge economic impact on workers and their families.”

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UberEats driver Darren Harris, 34, of Far Rockaway, Queens, was excited about the upcoming pay raise as he waited for work outside a Chick-fil-A in midtown Manhattan on Monday afternoon.

“I feel like it’s well-deserved because some days are good and others are really bad,” he said, adding that he only gets $2.50 to $3.50 per delivery, not including tips.

About 35 hours a week he works as a delivery and security guard. Harris said he makes about $150 on Uber Eats “on a good day,” $23 of which goes to renting an electric bike.

“With this new wage, you’re basically guaranteed to make a decent amount of money every day,” he said.

But critics said the real benefit to delivery workers may be smaller than advertised. City Controller Brad Lander, who first sponsored the bill as a City Council member in 2021, said the city watered down the law’s intent in the face of lobbying pressure after months of delays.

The actual wage increase will be less than $13 an hour, not close to $20 an hour, said Mr. That’s because the rule is part of a so-called multi-app exemption that considers how workers can log in, Lander said. in more than one application at a time.

Mr. Lander criticized.

The law allows delivery companies to meet new wage requirements this year through two different models: by paying a flat hourly rate, which is not common in the industry, or by paying per delivery, about 50 cents per minute, not including tips.

A spokeswoman for the mayor’s office said the rate increase would result in “significant” wage increases for workers, and Mr. Lander’s salary calculation was incorrect, he said.

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The multi-app fix is ​​appropriate, the spokeswoman said, based on a study of how workers use the apps, and the Department of Consumer and Labor Protection will review and revise the rule next year. The city is staggering wage increases over a two-year period to give delivery companies time to adjust to the new rates, he said.

Industry opposed the legislation. Kristin Sharp, chief executive of Flex, a trade association that represents delivery apps including DoorDash, Uber Eats and Instacart, said the additional costs for companies could mean higher fees for consumers and reduced or eliminated tips for workers.

Some companies may restrict access to the app to certain low-frequency workers, he said, depending on which payment model the companies follow.

Similar bleak predictions didn’t come true in 2019 when the rental car industry, a close analog to gig workers in New York, was forced to raise wages, said James Parrott, director of economic and fiscal policy at the New Center. York City Affairs at the New School.

A A 2020 study on the effects of that wage increase In Chicago, driver wages increased by 9 percent and passenger fares increased by about 5.9 percent in line with fare increases that did not establish a minimum wage. Customer waiting times also decreased, the study found.

Dr., who consulted with the city on delivery worker wages. Parrott said he doesn’t expect wage increases to fundamentally change the food supply landscape in New York, and he predicts demand will continue to grow.

The number of delivery workers in the city has more than doubled before the pandemic, from about 25,000 to 30,000 workers in 2019 to more than 60,000 today, he said.

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And delivery companies have significant margins to cover wage increases, he said. Last year, workers earned about $4.32 per delivery, not including tips, while delivery companies made an average gross profit of $4.19. According to a city report.

“It should not be tolerated that businesses can only function if they exploit their workers,” he said. “If it gets us out of a worker-exploitative business model, it seems like a fair trade.”

Erin Nolan Contributed report.

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