NYC sets minimum wage for app-based delivery drivers

New York City is about to become the first city in the country where app-based delivery workers get paid a minimum wage.

There are more than 60,000 people who do deliveries in the city, and starting in July, they’ll make almost $18 an hour before tips. By 2025, that’ll increase to almost $20 an hour.

Right now, delivery workers make on average about $7 an hour before tips, according to the city. That’s less than minimum wage, which is $15 an hour in New York.

For a while, Joshua Wood was making good money riding his bike around New York City and delivering food.

“In 2020 and parts of 2021, I was consistently pulling $25 to $30 an hour,” Wood said.

Wood is 25 and he’s been doing deliveries for years now. He said that what he was able to make during the height of the pandemic was unusual.

“Back then, customers were tipping a little bit higher,” Wood said. “There was also a lot of venture capital coming in.”

But these days, he said he only makes about $10 to $15 an hour, including tips.

“A lot of customers don’t tip,” he said. “A lot of the market right now is single meals, and those are usually only going to come with a tip of $1 to $2.”

So Wood is thrilled that soon he’ll be guaranteed to make at least $18 an hour. Vilda Vera Mayuga, commissioner of the New York City Department of Consumer and Worker Protection, is too.

“This is going to make a huge difference for these workers who have been going over rain, snow, extreme heat. We had the air quality last week here in New York,” she said.

App delivery companies, like Grubhub and DoorDash, are not so happy about the change. Neither would talk, but both sent statements warning of “adverse” or “unintended” consequences.

There could be, said James Parrott, director of economic and fiscal policies at The New School’s Center for New York City Affairs.

“It is possible that customers will tip less generously, and it’s also possible that the companies will increase the fees that customers have to pay,” he said.

But after New York passed a similar law for Uber and Lyft drivers in 2019, “it worked out to the benefit of the drivers, didn’t have a noticeably adverse impact on passengers, and the companies are still profitable,” he said.

Even if delivery fees do go up, Andrew Wolf at the Workplace Justice Lab at Rutgers University said that people are likely to keep ordering in.

“It is a luxury service, and people already don’t really tip as much as they should,” he said.

So even if they tip less, Wolf added that most delivery drivers will still make more than they do now.