Aggregators Oppose NYC Driver Wage Increase, but Low Pay Threatens Retention
Restaurant aggregators may be against legislation to raise drivers’ pay, but without some kind of change to their gig workers’ pay structure, they struggle to hold onto their networks of couriers.
By the Numbers
The latest edition of PYMNTS’ Real-Time Payments Tracker®” series, “Living Paycheck to Paycheck: Real-Time Payments for Financial Health,” created in collaboration with The Clearing House, found that 76% of gig workers live paycheck to paycheck. Plus, 30% said they will leave the gig work industry due to low or unpredictable earnings.
The Data in Context
Restaurant aggregators may lose their gig workers if they cannot compensate them better, but they are also concerned about the hit that pay increases would take on their per-order profit margins, or, after raising the price of the service to address these challenges, on consumers’ willingness to pay the premium.
After New York City announced that it is raising the minimum hourly wage for “app-based restaurant delivery workers” to $17.96 beginning July 12 and raising it again to $19.96 starting April 1, 2025, delivery marketplaces, including DoorDash, the United States’ largest restaurant aggregator, voiced their opposition to the decision.
“The sad truth is that both the City Council and [the Department of Consumer and Worker Protection (DCWP)] have chosen to ignore the unintended consequences this policy will cause, and how it will undermine the very delivery workers it seeks to support,” DoorDash stated in a blog post. “As we repeatedly made clear, to meet these new demands of such an extreme minimum pay rate, platforms like ours will have to increase costs on each order or reduce services in New York City.”
Overall, aggregators are feeling the cost pressure. Grubhub, for its part, announced Monday (June 12) that it is reducing staffing levels by 15%, a move that will impact about 400 employees.
“While our business has grown since our 2019 pre-pandemic levels, our operating and staff costs have increased at a higher rate,” CEO Howard Migdal told employees in a message posted on the company website.
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