City Council President Sara Nelson has claimed that her proposed gig worker pay cut “requires that app-based delivery workers in Seattle earn the city’s minimum wage.” But as a detailed analysis of delivery workers’ actual time and expenses shows, the policy she is attempting to ram through City Council in CB 120775 would in fact leave delivery workers with net pay of just $13.17/hour — a full $6.80/hour less than Seattle’s minimum wage. Meanwhile, it would do absolutely nothing to require apps to lower customer fees.
As independent contractors, gig workers like delivery drivers are responsible for significant work expenses, and extra unpaid work time, that employees do not incur. This means contractors’ hourly gross minimum wage for “engaged” time — the time they spend on deliveries from acceptance to completion — must be set at a higher rate than employee minimum wage in order to ensure minimum wage after accounting for their additional work time and costs.
Because Nelson’s CB 120775 fails to account for the additional time and costs borne by contractors, it would set a sub-minimum wage for gig workers.
How CB 120775 delivers sub-minimum wages
This massive pay cut, which Nelson herself has stated was developed by Uber, DoorDash, and the lobbyists they fund, would result in the lowest of all existing standards for gig workers in the country. By contrast, New York City delivery drivers paid by the job must be paid at least $32.60/hour (more than double that city’s $16/hour minimum wage) for their time actively delivering orders, resulting in net pay for all work time equivalent to that city’s minimum wage.
Additional details are available in the detailed breakdown of time and expenses.
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DoorDash’s CFO recently stated on the company's earnings call that they can make Seattle economically sustainable: specifically, he said that in response to requirements for higher pay in Seattle and New York City, they are "making the business more efficient," will "reduce the cost" they are absorbing, and that "we expect both markets to be sustainable from a unit economic perspective going forward".
DoorDash takes almost half of customer fees for themselves. A recent analysis of Seattle delivery orders found that DoorDash takes 48% of total fees on average — after paying the worker who does the delivery. This shockingly high take rate is confirmed by the company’s financial reports to investors, which show gross margins consistently about 40%.
If Council wants to lower fees, they should lower fees: Seattle already set a 15% cap on the share of food costs the apps can take from restaurants for providing basic delivery services. There is no reason why they could not establish a similar cap on how much they charge to customers above what they pay the worker who did the work.
Sara Nelson has a potential conflict of interest that should be investigated: As Carl Nelson wrote in the South Seattle Emerald, her sale of Fremont Brewing to a big restaurant group “raises serious questions about conflicts of interest for the business-friendly council president. As she rapidly moves to change laws that affect the restaurant industry, Nelson’s obligations as a policymaker are at odds with her role as a business owner. At the very least, she should recuse herself from introducing and voting on this legislation.”
Gig workers, policy experts, and community supporters are available to discuss the implications of this proposal ahead of Thursday’s committee hearing. Contact Hannah Sabio-Howell (hannah@workingwa.org) to arrange.