A controversial new minimum wage law for gig workers in Seattle that is drawing ire from tech giants has become one of Sara Nelson’s first policy issues to tackle in her new role as city council president.
Nelson, elected to the council in 2021 and appointed as president in January, spoke to GeekWire this week about the ordinance that went into effect last month and sets a minimum per-minute and per-mile amount for app-based workers.
DoorDash and Uber Eats responded by adding substantial new fees for consumers — $5 for each order — and say demand has fallen substantially in the subsequent weeks.
Uber published new data Thursday showing a 30% decrease in order volume over the past six weeks in Seattle. DoorDash said earlier this week that it saw 30,000 fewer orders in a two-week period since the law was implemented.
Some drivers who spoke at a City Council meeting this week said they’re making less money per hour and fewer tips.
Meanwhile, restaurant owners — particularly those that generate substantial revenue from the delivery apps — are concerned about how the new fees are impacting their businesses.
And consumers, many who have come to rely on these services, are complaining about the higher cost.
Nelson said she’s determined to find a solution soon to help drivers, restaurants, and customers.
“I’m very worried,” Nelson said.
Nelson said she’s supported a minimum wage standard for gig workers, dating back to when the ordinance was crafted and passed unanimously in 2022.
But she also was concerned about the potential higher prices on consumers — and the impact on drivers.
It’s still unclear how the legislation is impacting overall income for drivers, given the drop in demand.
One driver who spoke at the City Council meeting this week said he was consistently making around $20 per hour before the ordinance went into effect — and now his earnings have been cut by more than half.
Another driver we spoke with this week said she’s earning more per hour, but is getting fewer work opportunities.
DoorDash said the new law requires the company to pay drivers in Seattle at least $26.40, before tips and pay for mileage — well above the city’s $19.97 minimum wage.
In its blog post, Uber argues that Seattle lawmakers miscalculated the cost of driving a vehicle while making a delivery and said the ordinance was developed “with inadequate research and insufficient worker outreach.”
“As a result, they used ill-advised assumptions about how much it costs to drive a car that inflated pay far above the minimum wage rules that apply to all other kinds of workers in Seattle, while limiting the way platforms could implement these new rules more flexibly to avoid price increases for riders and eaters,” the company said.
Some supporters of the legislation argue that the companies are not forced to pass on additional labor costs to the consumer.
“It’s not the role of policymakers to regulate the profit margins of companies,” Nelson said. “The role of a policymaker is to support a thriving economy that generates well-paying jobs and tax revenue so we can provide essential services and all the programs that help our constituents. That’s the balance that we need to maintain.”
DoorDash said it wants a repeal of the ordinance, but Nelson said she’s not sure that’s workable.
The ordinance does allow for alterations via so-called “Directors rules,” which could provide a way to tweak calculations that establish the minimum wage standards.
Nelson, who is leading a council with six new members this year, hopes to have a solution that is ready to be discussed among lawmakers toward the end of next month.
“I’m not going to redo the whole legislation,” Nelson said. “I want to make changes that will reduce the cost of delivery so that people start ordering again, at the same levels they were before.”
The ordinance is part of several unique “PayUp” protection laws approved recently in Seattle designed to provide protections to gig workers that are treated as independent contractors. Some studies show that gig workers are sometimes paid less than minimum wage or subject to poor working conditions.
Seattle is one of the first cities to implement this type of minimum wage. New York City passed a similar ordinance last year.
Danielle Alvarado, executive director of nonprofit labor advocacy group Working Washington, told GeekWire earlier this week that the recent data being shared by the companies is “a predictable corporate move to oppose fair wages.”
Nelson, co-owner of the Fremont Brewing brewery in Seattle, said she’s not interested in debating whether the tech platforms have too much sway over the economics of food delivery.
“I don’t think that’s productive,” she said. “What is productive is getting toward a solution so that the needs of the customers and the drivers and the restaurants are being met.”
Nelson said more broadly, “it’s time to get over this us-versus-them attitude toward business in general, and especially our tech sector.”
“Many cities would be very lucky to have the tech sector that we have in Seattle,” she said. “And so I think it’s time to really value that and work together.”
