DoorDash and Uber are eager for regulatory action in Seattle.
For the past six months, the tech giants have been lobbying lawmakers to address a controversial minimum pay law for food delivery drivers that went into effect in January.
Four months later, Seattle City Council President Sara Nelson introduced a bill lowering the minimum wage standard for drivers from $26.40 to $19.97 per hour.
The council was supposed to vote on CB 120775 in May but postponed the vote to consider amendments.
It remains unclear when or if Seattle lawmakers will vote on potential changes.
DoorDash and Uber recently sent letters to the Seattle City Council urging them to pass CB 120775. The companies cite a new proposal from Councilmembers Joy Hollingsworth and Cathy Moore, which they say doesn’t reduce the existing minimum wage rates enough.
“This option is not a compromise, it does not reduce costs, will continue to limit earnings opportunities for couriers, and will not bring the significant change to the market that restaurateurs and workers need,” wrote Allison Ford, public policy manager at Uber, in a June 21 letter.
A spokesperson for Hollingsworth declined to comment in response to an inquiry from GeekWire about the proposal. Moore’s office has not responded to multiple emails.
After the existing law was implemented in January, Uber and DoorDash added a $5 fee to every consumer order as a way to offset the new regulation.
The companies say demand has fallen since then, with drivers waiting longer for orders and restaurants losing revenue.
“Even after adding a $4.99 regulatory response fee for Seattle deliveries, our company continues to lose money in the market,” wrote Anna Powell, government relations manager for DoorDash, in a June 24 letter. “Additional changes, including fee increases, will almost certainly be necessary for our operations to be sustainable long-term under the current law.”
The response from drivers who spoke at council meetings over the past several months, including during Tuesday’s meeting, is mixed. Some want the city to keep the existing pay standard because they are earning more money. But others say they are making substantially less income and receiving fewer orders.
Restaurant owners also offer conflicting opinions — some support the current law, while others say the lack of demand is hurting their business.
Drive Forward, a nonprofit trade industry association representing 2,500 gig workers across Washington state, held a media event at City Hall on Tuesday calling out Councilmembers Moore and Hollingsworth.
“The compromise reform package has stalled because two councilmembers don’t want to do their job and make a hard choice for the betterment of Seattle,” said Michael Wolfe, executive director at Drive Forward, which was founded by Uber and funded in part by corporations.
Wolfe described the existing law as “ill-conceived policy.” He said there’s a new proposal “that would allow platforms to eliminate fees on deliveries, pay workers 110% of minimum wage and a reasonable mileage reimbursement for vehicle cost.”
“Yet two councilmembers who could get this across the finish line, instead offer an unserious amendment that would not reduce fees and has no chance at restoring demand and will only further hurt workers,” Wolfe said.
DoorDash said previously that it would remove its $4.99 fee if CB 120775 is passed.
Hannah Sabio-Howell, communications director at Working Washington, a nonprofit that supported the passage of the existing law, called out Uber and DoorDash for “spending hundreds of thousands of dollars on a smear campaign against specific councilmembers.”
“All the companies are doing is proving that raising wages is common sense economic policy and cutting wages is deeply unpopular and unsupported,” Sabio-Howell said in a statement.
The situation in Seattle is being watched as part of a broader battle between tech-fueled food delivery companies and lawmakers setting minimum wage regulations. Uber and Lyft spent the past two years fighting minimum wage laws in Minnesota. DoorDash said a new minimum pay law in New York City has been “devastating.”
The current legislation in Seattle passed two years ago— with a much different council makeup — and is part of a series of “PayUp” gig worker protection laws. Other “PayUp” policies include an ordinance related to the worker deactivation process and a 10-cent per-order fee approved in November that will help fund the implementation and enforcement of the “PayUp” laws. Seattle also passed a sick leave law for delivery workers last year.
Seattle has become a testing ground for the impact of labor standards in a growing food delivery market facilitated by tech companies that tout the flexibility and independence offered by their platforms, but have come under scrutiny for their impact on workers and restaurants.
DoorDash and Uber Eats are the top two food delivery companies in the U.S. CEOs from both companies have discussed Seattle’s minimum wage debate on recent earnings calls.
“These regulations clearly are having the opposite impact of what they intend to do,” DoorDash CEO Tony Xu said in May.
Erin Hatton, a professor of sociology at the State University of New York at Buffalo and a labor researcher, said the situation in Seattle and elsewhere is complicated by the fact that companies such as Uber and DoorDash aren’t required to follow traditional employment laws.
“They aren’t required to comply with all of the financial obligations of being an employer, which are considerable,” Hatton said.
That’s why it’s challenging to create a new minimum pay system for the food delivery market, said Hatton, author of The Temp Economy.
“It would be more straightforward, and perhaps better for everyone, if they had to comply with the legal structure in place,” she said. “It would certainly be simpler. Of course, the companies would argue vehemently against that.”
