SEATTLE, Washington – Instacart and DoorDash are implementing price hikes in Seattle following the city’s new minimum pay law for delivery drivers. The law took effect on January 13, 2022, and requires companies like Instacart and DoorDash to pay their drivers a certain rate per minute and per mile during orders. This move comes as the federal government is also considering raising wages for gig workers across the country.
Under the new law, delivery-app drivers in Seattle must be paid at least 44 cents per minute and 74 cents per mile during orders, or $5 per order for lower-paying orders. This is a significant change since these drivers have been treated as independent contractors and were not directly subject to the city’s regular minimum wage of $19.97 per hour for large company employees.
The Seattle Office of Labor Standards director, Steven Marchese, considers this law as an essential step towards empowering workers, consumers, and businesses within the gig economy. However, both Instacart and DoorDash have criticized the law and have announced price increases and other changes as a result.
Instacart has informed its customers that they will experience new fees due to the significant increase in operating costs under the new regulation. The company estimates that the wage hike amounts to drivers earning $26 per hour. Additionally, the new requirements mean that Instacart will only facilitate orders from Seattle retail locations to customers within Seattle, disallowing orders from customers outside the city.
DoorDash is also introducing new fees as a response to the law. The company has expressed concerns that this well-intentioned regulation may harm its drivers, customers, and merchants. It believes that merchants may experience significant declines in order volume and negative impacts on services.
This new law coincides with the U.S. Department of Labor’s preparations to implement rule changes that could potentially provide gig workers with more benefits and make it harder for companies to classify them as independent contractors. While companies argue that these rules may not significantly affect them, there is speculation that the impact could be more substantial than anticipated, potentially leading to higher prices for consumers.
Structural changes in the gig economy may force platforms like Instacart and DoorDash to adjust in the face of rising costs. Uber, for example, has indicated that proposed gig worker laws in Europe could trigger price increases of up to 40%. These developments suggest that the gig economy is undergoing a period of transformation and that further changes may be on the horizon for both companies and workers.