Uber, DoorDash Sue NYC to Stop Delivery Drivers from Getting a Minimum Wage
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Can’t say I agree with this logic. (Conclusion fine.) Apple didn’t sue the FBI from a position of weakness [1]. DoorDash et al, understandably, don’t want to be disadvantaged in their grocery business [2]. Reading between the leaves, I think that’s what they’re pushing for. They also don’t want to change the status quo, which is less reasonable, but not a sign of strength or weakness per se.
In any case, most small businesses in America operate on single-digit margins. Almost every restaurant would be wiped out by what, from a tech perspective, is a meaningless change in margins. There is nothing meaningful to conclude simply from the fact DoorDash is challenging the rule.
[1] https://en.wikipedia.org/wiki/Apple–FBI_encryption_dispute
[2] https://doordash.news/get-the-facts/why-were-filing-a-lawsui...
It also sued the government. My point is “suing the government is not a sign of strength” or weakness. It’s a non-signal. I think DoorDash is wrong here, though they have a kernel of a point in why grocery delivery is not covered by the rule. But their suing the government says nothing about their strength or weakness.
Companies that have made similar moves are Uber, Airbnb for example, but not Apple.
Fine, Disney. Or hell, Oracle [1] and Boeing [2]. Is there a serious view that someone suing the government always does so out of desperation?
[1] https://en.wikipedia.org/wiki/Joint_Enterprise_Defense_Infra...
[2] https://en.wikipedia.org/wiki/CSeries_dumping_petition_by_Bo...
In the former, companies sue because it doesn't really cost them much to try and see if something works out in their favor, while in the latter they're suing because the legislation would have some negative effect on their existing business.
They will be fine. It's the consumers and delivery drivers who will mostly pay for it.
The players: restaurants, drivers (current and former), platforms and consumers. Former drivers, those who don’t make the new cut, will lose. Drivers who stay on will gain. Looking at leverage, consumers are less likely to bear the burden than restaurants. Given the new fixed cost of operating a delivery platform, the incumbents’ threat of competition from new entrants is reduced; that will help them.
If I were to make predictions, I’d expect to see some consolidation among the platforms with the winners squeezing restaurants and consumers waiting longer more than paying a higher price. (It is notable restaurants have virtually no representation in this debate.) The pie will be smaller. But the platforms’ role in it will be more stable and secure.
1. An affected restaurant increases costs for online purchases to compensate.
2. An affected restaurant stops offering delivery. If it's not worth the money, why offer it?
3. An affected restaurant gets its own drivers. That's how delivery used to operate before the gig economy, and it allows them to control costs and fees.
I've already seen restaurants start putting on delivery charges, and often significant ones (a $6 delivery charge doesn't seem unusual where I am).
> But the platforms’ role in it will be more stable and secure.
I don't think it will be. The platforms currently offer discoverability and drivers. If platforms aren't willing to bear the costs of the drivers, restaurants will stop using their driver services. And if the platforms are reduced to just discoverability, it becomes much easier for competitors to enter the market.
The rides are somehow cheaper, have no surge pricing, and from some insider reports, has profitable unit economics.
Their app isn’t quite as snappy, but it works fine.
They’re eating Uber’s lunch in my city and makes me wonder how Uber is screwing this up so badly.
This is just guesswork. May it be related to the VC funding that holds them afload, where at every turn they need to think about the future (and quick-as-possible) 10x return on investment that is in the fine-print of the VC contracts?
Or they may be so imbibed by startup-culture "Greed is good" mentality from the very start, that it is unthinkable to consider not squeezing it, and shaving off for every penny.
That may be, but are they equal or more profitable than the Uber, et al model? I'm willing to bet if it were that they would be doing that instead. These companies are in the U.S. where maxing profits/shareholder value vs. taking care of employee needs (or any other need) is generally the name of the game for a major majority of companies.
It’s just that Uber and co are overwrought beasts that never had a successful plan in mind.
> The rides are somehow cheaper, have no surge pricing, and from some insider reports, has profitable unit economics.
So a fleet of depreciating assets with a major infrastructure dependency, lower implied gross margins, and word from insiders of a positive bottom line without publicly disclosed financials to sanity check claims against. Curious to see what their balance sheet looks like.
The entire Asia Pacific geographic region, including India, accounted for 10.9% of Uber's FY22 revenue[1; p. 94]. It's likely more of an incidental snack than full lunch, but it would be funny if Uber lost out to what sounds like an upstart taxi company.
[1] https://www.sec.gov/Archives/edgar/data/1543151/000154315123...
Tax deducting depreciating assets ;)
Turns out uber isn't magic and the market settled on taxi companies being a thing that exists for a reason.
[1]: https://www.livemint.com/companies/start-ups/blusmart-mobili...
How about when SpaceX sued the US government because they were awarding launch contracts to Boeing without competing? SpaceX largely won that and they had a good point.
That said I don't think a win here would help the current workers. Like all minimum wage laws this will reduce demand (obviously people don't want to pay a 12$ delivery fee for an order of $20), push business towards even shadier employment practices and medium term towards automation / "self-service".
As much as I would want it not to be true, the low-skill end of the employment market will always be easily replaceable and consumers won't be willing to pay unlimited amounts for something they could easily do themselves. As such it would help people a lot more if there was an easy path towards acquiring skills, guaranteeing that these bottom-rung jobs will be only temporary.
I realize there's psychology at play here but to an extent aren't we already doing that through essentially obligatory tips?
> As such it would help people a lot more if there was an easy path towards acquiring skills, guaranteeing that these bottom-rung jobs will be only temporary
When the service industry worker has to spend all their time working in order to make even a marginally livable wage the path is to pay them more money, directly or indirectly. The problem is exacerbated in high COL areas, and sure you can say "ok well just move", but broadly speaking you still need someone to do these tasks and that pool is dwindling.
But … I don’t think the cities are properly accounting for the ease of using multiple apps? If a driver is logged into Uber and Doordash and GrubHub on 3 phones waiting for a delivery they probably should not be accruing $17.96*3 per hour at that time. But it sounds like they might be able to under this new law.
If the apps are idiots, perhaps. In practice, this law basically all but these companies to employ a fleet of drivers.
You can already see this at work as Uber tries to become profitable - ride availability, cost, and quality are getting worse but people continue to use them out of habit or because regional alternatives have been weakened by years of subsidies.
The competition ceases to exist and the requirements to re-enter the market once the dumper is a monopoly (usually with the politics power that entails) is beyond the scope for damn near anyone to achieve.
Why not? The entire shtick of Uber et al is that employees choose their hours and gain "freedom" from employees. This is what freedom looks like. Employers can't tell freelance contractors how they should behave. They decide a contract, they get a service and get their job done.
The contract can absolutely require exclusivity if paying by time.
See: https://www.irs.gov/taxtopics/tc762
It's mostly not whether they can contractually demand any one particular thing. It's the sum total of behavioral and financial control they exert. Exclusivity would be a pretty big ticked box.
If Uber/Doordash tick enough of those questions, then they are at risk of having to treat their drivers as employees. Which is more expensive.
You're saying that they should get both the benefits of freelancers (pick work) and employees (minimum wage).
Other than the obvious authoritarianism, that would also harm the environment with people driving a lot more.
Funny I have the exact opposite opinion. I think it's good for all parties involved. Restaurants get a bigger market. Delivery people get more freedom at work. Eaters get convenience. Delivery apps get a piece of the revenue for efficiently routing drivers and customer service.
If it's truly bad for all parties, there'd be no Uber Eats, no one would order from Uber Eats, no restaurant would sign up, and no one would deliver.
What a strange take.
If I take 3 billion dollars and setup a company that flies in people from other parts of the country at a loss to do your job for half the money you get for it, and have everyone compete for it, then when you lose your job and the business you worked for gets dependent on a business model requiring cheap disposable labor and I own the market I then I jack up prices to more than you were being paid but take the difference as profit, would you consider that a win for all parties?
* https://www.marketwatch.com/investing/stock/uber/company-pro...
Getting paid 7 bucks an hour in NYC: that's freedom, baby!
- Drivers: clearly unhappy with their pay at least in NYC and other major markets.
- Restaurants: have been quite vocal about how they are in a lose-lose situation because they can’t afford to not participate but also have to give a massive cut to Uber.
- Customers: probably the happiest group but in general there’s a rising tide of complaints about the massive fees.
- Uber/Doordash: losing money despite everyone else thinking they’re taking absurdly high cuts.
The entire model is unsustainable if everyone thinks their cut is too low. Regulation will probably fix it for one or two parties which will cause the others to opt out.
But people are still ordering. Drivers are still driving. Restaurants are still on the apps.
So clearly, some people still find value in all of this.
At the core of the problem is the concept if a contractor. These cities are trying to go around a federally defiend concept of contracting. You agree, as a self-employed business operator to provide services and get paid for it. Employees on the other hand provide labour which means performing assigned tasks under a specific job title, typically under some sort of management with performance reviews and accomodations provided. Anyone from IT workers to general contractors contract out services as a business, not labour as an employee.
When you hire a general contractor to fix your roofing for example, they are not your employee, you don't have to pay them minimum wage, withold taxes or provide medical care and paid vacation to them. I have been a contractor and hated it but I know people who love it.
The scale and nature of Uber's business is no reason to treat them differently when everyone is supposed to be equal under the law. Taxii drivers were typically independent contractors as well unless they had their own medallion back in the day.
I have not read any argument so far as to why Uber and friends should be treated differently.
I would hate to pay more for their services just because a bunch of people who can't ger a job elsewhere want to force uber into employing them when it wants to contract them. Most people I have met who do this work have another day job and uber is extra income. If you wanna do it full time, you can pick locations like airports for uber and downtown areas for doordash and ubereats, especially in places like manhattan or miami and make much more than minimum wage.
To be clear, under this law, the guy who hustles and makes $25/hr will get paid minimum wage just like the guy who takes a nap in his car near his house until he gets an order/ride. Essentially, in addition to other burdens, they want drivers to be paid for being available but also drivers would have to be told where to work and how to work, for example you can't park in the middle of nowhere, where you know you won't get any orders and get paid for it.
- NYC food delivery gig workers score a big minimum wage victory (96 comments): https://news.ycombinator.com/item?id=36327770
- DoorDash, Grubhub and Uber sue New York City over minimum wage law (59 comments): https://news.ycombinator.com/item?id=36626525
- New York City Sets New Minimum Wage for Food Delivery Workers (7 comments): https://news.ycombinator.com/item?id=36302121
I really wish companies weren't able to sue over this kind of thing.
The law is the law. The government should be able to create and update laws without getting mired in endless bureaucracy. If a majority of people don't like the law, they can elect different leaders, who should then be empowered to change the law at a reasonable speed.
Some number of restrictions on government power are of course healthy—I value the right to free speech, for example—but for goodness sakes, the government of New York City should be able to set minimum wages within New York City! This just isn't complicated.
What I take issue with is quotes like the one in GP. "The law is improperly implemented, because it would force companies to pay workers for any time logged into the app." So what? If the city decides workers should be paid for time spent getting their phones repaired, the companies should have to do that to. I don't know what the legal process here is but there's clearly too much of it.
Another choice quote:
> For instance, why would the agency choose to purposefully exclude companies that only facilitate grocery deliveries from its study and rulemaking, when those that facilitate both restaurant and grocery deliveries from local businesses would have these rules apply to them?
I don't know. Why does it matter? People often complain that government regulations aren't able to keep pace with private industry, but it's because of this BS slowing everything down that they can't keep pace! Let's empower the government to actually make rules and give them responsibility for the consequences.
Some of Ezra Klein's recent podcast episodes are weighing on my mind here, particularly https://www.nytimes.com/2023/06/06/opinion/ezra-klein-podcas...
However, there are a few wealthy people against the change who can file lawsuits, pressure the community board, and donate to the mayor's office. That seems to have been enough to get the mayor to overturn his own DOT's plan[2]. The change itself isn't even a large-scale capital redesign of the street; it's entirely a plan using temporary repainting, movable barriers, and signal changes. It's exhausting living here.
Edit: If you live in New York and want to voice your support for the aforementioned road redesign, you can do so at https://www.safemcguinness.com
[1]:https://www.thecity.nyc/2023/6/13/23759703/keep-mcguinness-m... [2]:https://nyc.streetsblog.org/2023/07/05/mayor-yields-to-oppos...
Heh. Do these companies interview their gig workers? Could I collect some passive cash like this?
What a soul sucking job interview that would actually be:
What makes you a great delivery bicycle person and where do you see yourself in 5 years?
So in other words, these companies would mandate that you make a minimum of 17 bucks worth of deliveries or get fired, no?
The city is just being stupid on this one.
Gig workers can choose to only work when it’s peak hours then stay home.
That said, no one is forcing DoorDash to allow people to log in.
I think they should have to pay for any part of an hour in which they allow a worker to login. And additionally if they refuse a login, they must continue refusing it for a minimum of 1 hour.
This way they will be incentivized to create a core of real employees for the off hours work, and only use gig workers for peak times.
Why? Don't hire delivery drivers of you don't need them.
It is not a marketplace from the drivers perspective.
$17 + fees + tips? => $20+ delivery fee.
Unless you are delivering for a well-off family of 5, it makes no sense.
I think the higher fee will push out the boundary of where average, healthy people are willing to travel, but it doesn't push it out great distances.
In New York?
> will essentially kill these platforms
It will curtail them. They will need to trim their driver network, which will reduce the number of drivers and increase delivery times. Restaurants and consumers outside high-density areas no longer make sense to cater to. Dropping restaurants who don’t meet minimums will also, likely, be necessary. In summary, this is entirely solved with densification—food delivery in New York predates these platforms.
There are two classes of gig workers whose interests are at odds: the ersatz full time and true part time. The former, whom worker rights activists highlight, is being exploited. The latter, which companies like to talk about, benefit from a high-flexibility additional source of income.
The ratio of the former to the latter increases with density; there is more work to fill the hours. Below a certain level of density, the former cannot exist. It’s absolutely possible that the optimum for New York is not the same as in rural Kentucky, where outlawing the odd job an otherwise stay-at-home parent takes to earn extra cash does more harm than good.
It might kill that special place across town, or at least cause it to reduce hours.
EDITED TO ADD: Something that isn't often mentioned in these discussions is that the existence of businesses predicated on exploiting labour is narrowing the space for businesses that would be willing and able to compensate their workers fairly. Delivery apps are pricing out sustainable business models if they are allowed to skirt labour regulations, just like the common practice of Amazon and other companies treating delivery drivers as independent contractors.
The alternative is restaurants hiring delivery drivers with reasonable ranges. There are a few of these in my area and I greatly prefer them. The food arrives on time and hot, every time.
The next step would be restaurants near each other banding together to share a pool of delivery workers. In practice, I think that is what these platforms will become. The city divided into zones, each zone with a set of drivers, and consumers strongly encouraged to order from in zone.
Yes. But there are clearly other factors of higher weight. I am not usually shown the closest restaurants first, but instead close enough restaurants.
Every hallway had a pile of menus. It’s not really better now and killing these apps wouldn’t make it worse.
Discoverability is better. There may be a niche for a non-profit app that identifies local restaurants with free delivery. A virtual hallway pile.
I don’t think local restaurant discovery, in the context of delivery, is a remotely solved problem outside the food-delivery apps.
Could it maybe be the case that this service was previously undervalued, or is that somehow out of the question?
Source: I am friends with several restaurant owners in NYC.
[1] https://doordash.news/get-the-facts/why-were-filing-a-lawsui...
Plenty of people can afford this food and some luxuries, but then contribute 0 to their retirements.
Heck, as much as I like one of my best buds, he is a 6 fig earner and saves nothing. He buys niche cars, goes on soo many trips, orders so much delivery food, then complains how expensive his student loans are. Back in 2018 before he bought that car, I showed him he could pay off his student loans entirely before the end of the year.
I’m still sleeping and my wife wants to get donuts or breakfast burritos for the kids on a Saturday.
I am out at a basketball game and the wife wants food for the family that isn’t pizza.
We’ve been hanging out in the pool drinking all afternoon and we want an easy dinner that isn’t pizza.
C'est tres simple