New York City sets a new minimum wage for food delivery workers

Perhaps more than any other American city, New York relies on a growing army of delivery workers who have faced cascading waves of Covid, harsh weather and toxic air as remote work has reshaped the economy. Now, they get a raise.

Starting July 12, delivery workers in New York City must earn at least $17.96 an hour, not including tips — the first minimum wage rate in the nation for an industry that has exploded during the pandemic. Mayor Eric Adams announced the increase, which will go into effect nearly two years after the City Council passed a set of laws designed to improve conditions for workers, over the weekend.

Critics say the rule doesn’t go far enough to compensate workers, who must bear a range of expenses as independent contractors, including repeated injuries on the job. And industry groups argue the extra costs could stifle opportunities for some workers and pass the costs onto consumers and restaurants, which already pay high fees to use the apps.

The city’s 60,000-plus delivery workers, who handle courier, groceries and other goods, earn an average of about $11 an hour, after tips and expenses are factored in, less than the $15 New York minimum wage, according to an analysis. City paid. They also cover their own health insurance, business expenses, and additional taxes.

The new law, first proposed in 2021, would eventually raise the minimum wage for workers to at least $19.96 an hour in 2025, or more, based on inflation.

“This is huge and historic for an entire industry that has no protection,” said Ligia Gualpa, executive director of the Labor Justice Project, a labor advocacy group that pushed for the law. “It will have an enormous economic impact on the workers and their families.”

Daron Harris, 34, an Uber Eats driver from Far Rockaway, Queens, who was waiting for a job outside Chick-fil-A in midtown Manhattan Monday afternoon, was ecstatic about the upcoming pay raise.

“I feel it’s very well deserved, because some days are good and some days are really bad,” he said, adding that he only receives $2.50 to $3.50 per delivery, not including tips.

Mr. Harris, who delivers 35 hours a week and also works as a security guard, said he earns about $150 with Uber Eats “on a good day,” of which he must spend $23 renting an electric bike.

“With this new wage, we are basically guaranteed to make a decent amount of money every single day,” he said.

Critics said the real benefit to delivery workers may be less than is advertised. City Comptroller Brad Lander, who first sponsored the bill as a city councillor in 2021, said the city has softened the intent of the law, after months of delay, in the face of pressure from lobbying.

The actual wage increase would be less than $13 an hour, Lander said, not close to the $20 an hour the city is proposing, in part because the rule includes a so-called multi-application deduction that takes into account how workers are signed up for more than one application at a time. One.

Mr. Lander also criticized the city’s decision to scale wage increases through 2025, when workers will already be paid less than the minimum wage.

The law allows delivery companies to meet new payment requirements this year through two different models: either by paying a flat hourly rate, which is not common in the industry, or by paying per delivery, at a rate of about 50 cents per minute, not including tips.

A spokesman for the mayor’s office said that an increase in the rate would result in a “significant increase” in wages for the workers, and that the calculation of Mr. Lander’s wages was incorrect.

The spokesperson said the multi-application amendment is appropriate, based on a study of how workers use the apps, and the Consumer and Labor Protection Division will review and possibly revise the rule next year. He said the city has been staggering wage increases over two years in order to give delivery app companies time to adjust to the new rates.

Industry groups opposed the law. Christine Sharp, chief executive of Flex, a trade association that represents delivery apps including DoorDash, Uber Eats and Instacart, said the extra costs for companies could lead to higher charges for consumers and reduced or potentially canceled tips for workers.

She said some companies may limit access to the app to some less frequent workers, depending on which payment model the companies pursue.

Equally bleak expectations were not met when the rental auto industry, a close counterpart to gig workers, was forced to raise wages in New York in 2019, said James Parrott, director of economic and fiscal policy at the New England Center. York City affairs are at the new school.

a A 2020 study on the effects of that wage increase It found that driver salaries increased by 9 percent and passenger fares increased by about 5.9 percent, in line with the fare increases seen in Chicago, where a minimum wage standard was not set. The study found that customer wait times decreased as well.

Dr. Parrott, who consulted with the city on delivery worker pay, said he didn’t expect the pay increases to drastically change the food delivery landscape in New York, and he expected demand to continue to grow.

He said the number of delivery workers in the city has more than doubled since before the pandemic, from about 25,000 to 30,000 in 2019 to more than 60,000 today.

He said delivery companies have large margins to help offset wage increases. Last year, workers made about $4.32 per delivery, excluding tips, while delivery companies made an average total profit of $4.19, According to a city report.

He said, “It should not be tolerated that business can only operate if they can exploit their workers.” “If we take this away from a business model that exploits workers, this seems like a reasonable trade-off.”

Erin Nolan Contribute to the preparation of reports.