Food app titans fight NYC ‘deliveristas’ seeking just wages for their families

Food app titans fight NYC ‘deliveristas’ seeking just wages for their families

(OSV News) — Scripture says “the laborer deserves his wages” (1 Tm 5:18) — but online food order titans DoorDash, Grubhub, and Uber Eats have recently sued New York City in a legal bid to block a new requirement that raises the minimum wage of their delivery workers to almost $18 per hour.

New York City Mayor Eric Adams said the wage statute is intended to “significantly” boost pay for the over 60,000 people — also known as “deliveristas” — who daily sprint through the Big Apple’s streets to bring restaurant food and other services to New Yorkers.

“Our delivery workers have consistently delivered for us — now, we are delivering for them,” Adams announced in a June 11 statement and news conference. “This new minimum pay rate, up by almost $13.00/hour, will guarantee these workers and their families can earn a living, access greater economic stability, and help keep our city’s legendary restaurant industry thriving.”

The rule — introduced by the New York City Department of Consumer and Worker Protection — stipulates a wage of $17.96 per hour starting July 12 rising to $19.96 hourly by April 2025, and then adjusted annually for inflation. Food delivery workers — who are classified as independent contractors, not employees — currently make an average of $7.09 per hour, according to a news release from the city.

The regulation was set to take effect July 12; however, on July 7, New York State Supreme Court Justice Nicholas Moyne issued a preliminary injunction. A July 31 hearing will decide if Moyne’s order stands while legal challenges proceed.

Establishing just wages for delivery drivers — in New York City and elsewhere in the nation — is often complicated by competing interests.

“The minimum wage debate for food delivery drivers in New York City is really the overall ‘just wage’ question in a microcosm,” said Daniel Graff, history professor and director of the Higgins Labor Program at the University of Notre Dame’s Center for Social Concerns in South Bend, Indiana, which also operates the Just Wage Initiative.

“What workers make is always shaped by multiple stakeholders, and here those directly include the platforms/employers, customers, restaurants, and local government,” Graff told OSV News. “The debates amongst these groups is a reminder that we’re all responsible for what workers earn, and we need to feel and act more on that responsibility.”

The Catechism of the Catholic Church states, “A just wage is the legitimate fruit of work. To refuse or withhold it can be a grave injustice. … Remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into account the role and the productivity of each, the state of the business, and the common good.”

In his 1981 encyclical, “Laborem Exercens,” St. John Paul II declared that an economic system without just wages is itself unjust, writing “a just wage is the concrete means of verifying the justice of the whole socioeconomic system and, in any case, of checking that it is functioning justly.”

Nonetheless, disagreement is easily stirred over the precise dollars and cents that constitute a just wage.

“The response of minimum wage advocates has always been — and I think rightly so — that the job should define what the pay and conditions are, not the person doing the job,” said Graff. “Household size, the workers’ intentions and future prospects shouldn’t shape the pay of the job, because for most jobs, especially like these, most of the people doing the jobs require those jobs to make ends meet.”

As of March 2021, 47% of Americans had ordered food via a food delivery app, according to HotelTechReport. Business of Apps — a media and information platform for the global app industry — predicts “the entire food delivery app industry is expected to reach $165 billion market size by 2029.”

“Anybody in the so-called gig economy, one of the reasons they’re attracted to it, is precisely because they are their own masters — and in some cases, they’re actually willing to take a certain degree of an economic hit in order to have that freedom and flexibility,” Father Robert Johansen of the Diocese of Kalamazoo, Michigan, a theologian who has written on the church’s teaching and the minimum wage.

“For the government to come in and say, ‘No, you can’t have that — we know better,’ could be seen as kind of one of the worst aspects of the so-called nanny state,” Father Johansen told OSV News. “Regulation, legislation, law, is a relatively blunt instrument — and it can’t take into account all the various permutations and needs of all the different parties involved, and individual judgments about what is best for them.”

Some delivery workers are single, some are married with family; some are gigging for extra cash, some are hoping to make it a career; some will get more education and move on to other opportunities, some never will.

“I can’t conceive of how you could possibly come up with legislation that is going to treat equally or in a balanced way people coming from such drastically varied conditions,” said Father Johansen. “To treat them as fully employees creates problems, and to treat them as fully entrepreneurial creates problems. There’s a tug-of-war going on, and this is always the case in economics.”

Delivery workers are tipped, but there are obvious inconsistencies in the practice — some customers tip generously; some not at all. As independent contractors, they lack traditional benefits such as health insurance and paid time off, and are responsible for both employee and employer taxes at a combined rate of 15.3% — the sum of 12.4% Social Security tax and 2.9% Medicare tax on net earnings.

For a $10.50 food order, DoorDash’s website indicates base pay of $4, “calculated based in estimated time, distance and desirability of the order.” Workers choose which deliveries they will accept when their end of the app offers them a delivery gig. Tips are critical.

If New York City’s minimum wage rule eventually takes effect, DoorDash, Grubhub and Uber Eats predicted increased costs of $5-6 per order — as well as fewer orders. Those increased costs will almost certainly bring increased fees for customers, since each billion-dollar company has struggled with profitability as recently as 2022.

“Ninety percent of the time, the delivery fee we get from DoorDash is $3 or less. And that’s true with most of them — I also do Uber Eats; I do Grubhub,” said Ron Walter, a former nonprofit business manager who took up food delivery. Walter runs the website and also hosts a podcast; both advise would-be workers how to act as successful entrepreneurs in the gig economy.

“Essentially, they’re paying you about two or three dollars. Well, it costs 40-50 cents a mile to drive your own car,” Walter told OSV News, citing miles, gas, and wear and tear. “The average delivery runs 4-5 miles. So you go 5 miles at 40-50 cents, and all of a sudden, you’ve eaten up that delivery fee. The only profit you’re getting is the tip,” he explained. “And when a delivery takes 20-30 minutes, the question isn’t so much is 5 dollars enough as a tip — if it were a tip that were on top of a reasonable wage, sure, that would be more than plenty — but is five dollars enough for 20-30 minutes’ worth of work?”

“There has to be a conversation somewhere about what’s the best way to do this,” said Walter. “My hope is eventually somebody figures out a more logistical model that can make sure that the driver gets paid well enough, but also is efficient enough that the company can stay in business doing it.”

Kimberley Heatherington writes for OSV News from Virginia.

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