New York City’s minimum wage hike has boosted pay for food delivery workers who have managed to stay employed, but city officials report that thousands have lost their jobs as the cost of delivering meals has skyrocketed.
A report from New York City’s Department of Consumer and Workforce Protection said pay has increased substantially due to a law that went into effect in December raising the hourly wage to nearly $20. Delivery apps including DoorDash, Grubhub and Uber Eats filed a lawsuit last year to try to block the law.
The report said employed people earned 22% more in the first quarter than in the previous quarter, $28.3 million more per week, and 42% more than in the previous year. This is despite a 22% decrease in the number of hours worked per week, according to the report released late last week.
According to the report, the average hourly wage, including tips, was $19.26, up from $11.72 a year ago.
But at the same time, the total number of active delivery driver accounts on delivery apps fell to 99,000, down 8% from the previous quarter and 9% from a year ago, the study found.
It’s a sign of the thousands of people who have lost their jobs since the controversial law took effect. City officials estimate that 65,000 of the city’s delivery drivers have worker accounts, some of whom make deliveries on multiple apps.
Meanwhile, food delivery costs have soared by 10%, according to the report, including a 12% increase in restaurant delivery menu prices and a 58% increase in commissions that apps add to cover rising wages.
In response, customers are tipping less: The report, released Thursday, found that apps have increased delivery fees by an average of $2.30 per order, but the average tip amount has fallen by $2.64.
Andrew Schnipper, who owns Schnipper’s Burger restaurants in Manhattan (one on Eighth Avenue near the Port Authority and one on Lexington Avenue and East 51st Street in Midtown), said he is also using apps less for delivery.
“Costs are certainly rising for consumers, and more people are ordering online and picking up in stores to avoid high fees,” Schnipper told the Post. “This signals a change in behavior.”
Ultimately, the average food delivery price increased by 76 cents per order to $39.11, according to the report.
Despite the rising charges, the number of deliveries increased 8% year over year to 2.8 million in the first quarter, and customer spending rose 10% to $103 million, according to the report.
Delivery apps argue that the optimistic outlook presented by the DCPW is misleading at best.
“In its 2022 study, DCWP predicted that delivery driver incomes would increase but that income opportunities would be concentrated among the few. Today’s report shows this to be true,” Grubhub said in a statement.
Uber Eats claimed that the number of delivery drivers on its app had fallen by 12,000 since the new law came into force, adding in a statement that “drivers who are still able to work will have to work harder, including making 80% more deliveries per hour than before the rules came into force.”
Uber Eats also claims for the first time that about 27,000 New Yorkers looking for delivery jobs have been put on a waiting list.
The city argues that before the wage law, app companies had no incentive to limit the number of employees available because they didn’t have to pay employees for the time they spent waiting to receive a delivery order, known as “on-call time.”
Workers are now primarily scheduled to work shifts, making “better use of workers’ time,” the city said.
Ligia Gualpa of Los Deliveristas Unidos, which has fought for minimum wage legislation, blames the app’s punitive policies for the job losses, claiming that the app suspends the accounts of workers who “refuse to drive faster or to fulfill all the orders presented to them.”
App companies are “recruiting new workers every day to replace those who are rebelling,” Gualpa told the Post.
According to the group, around 50 to 70 delivery workers are being laid off every day.
DoorDash fired back in a written response, saying the city’s report “doesn’t tell the whole story” and uses “cherry-picked numbers.”
“We’ve heard time and time again from users across all aspects of our platform that the new rules just aren’t working,” DoorDash said in a statement.
“And the numbers bear out that sad truth: rising costs have resulted in thousands of lost Dashers delivery orders, costing local businesses millions of dollars in lost revenue,” DoorDash added.
The city’s report is the first to analyze data from January to March that app companies submitted to the Department of Consumer and Worker Protection, which is responsible for regulating the delivery industry and monitoring compliance with minimum wage laws.
