Seattle Regretting Minimum Wage for Delivery App Drivers

Backlash from consumers, restaurant owners, and drivers prompts reconsideration

Seattle became one of just two cities across the nation to impose a minimum wage for delivery app drivers in January—and now it is having a bit of buyer’s remorse.

The Seattle ordinance mandates that such workers receive the equivalent of at least $19.97 an hour. In a completely predictable fashion, delivery app companies such as Uber Eats, DoorDash and Instacart decided that they could not absorb these added costs and reacted by passing the costs onto consumers in the form of additional customer fees ranging from $5 to as much as $25 per delivery.

As I noted in a column for The Hill earlier this year, New York City’s latest minimum wage increase, to nearly $18 an hour, similarly prompted delivery app companies to impose higher delivery fees, and food delivery workers realized smaller tips and reduced hours and flexibility as a result. The same thing is happening in Seattle.

A recent NPR story noted that many restaurant owners, and some drivers who realize how the law may negatively affect their income, have raised concerns and made their opposition to the ordinance known. Peter Pak, who owns a Korean restaurant in the city, testified against the new minimum wage law at a city council meeting, explaining that orders at his restaurant had dropped by around 40 or 50 percent since it went into effect.

While Seattle City Council President Sara Nelson indicated that she sympathizes with such concerns and wants to find a way to reduce costs, she still does not seem to grasp basic concepts of economics and running a business.

“My interest is to come to an agreement that makes those fees go away so that the cost of deliveries is lower, so that it drives demand up,” Nelson told NPR.

But her proposed solution is to get the delivery app companies to agree to reduce their delivery fees in exchange for compensating drivers less for their time and mileage.

As the saying goes, however, “There ain’t no such thing as a free lunch.” The costs must be borne by someone. You can’t use the force of government to impose significantly higher costs on businesses and then simply wish them away. So Nelson and her ilk are trying to fix things by micromanaging businesses even further by telling them to foist more of the costs on drivers and less on consumers (as if that would solve the problem).

Of course, if she were genuinely interested in making the “fees go away so that the cost of deliveries is lower, so that it drives up demand,” all Nelson and others on the city council would need to do is repeal the costly mandates that they imposed on businesses in the first place. But that would be far too sensible.