Seattle has a new gig worker minimum wage. Who's benefiting and who's footing the bill?

If you've opened the DoorDash food delivery app recently, you might have seen a message pop up: "New Seattle regulations will significantly increase the costs of facilitating delivery, and as a result, we are implementing a $4.99 fee for all orders placed in Seattle.”

That fee represents the latest salvo in a struggle over how gig workers are paid in the city.

Starting during the pandemic, Seattle’s city council has approved a series of labor protections for delivery app drivers who work for companies like Instacart, Uber, and Doordash.

An ordinance requiring a new minimum pay per mile — and more during orders — took effect on Jan. 13.

And delivery app companies? They really hate this new law.

"Seattle businesses have already missed out on more than $1 million in revenue. And that's just on the DoorDash marketplace platform," said Anna Powell, government relations manager for DoorDash.

Doordash published a short report on Tuesday, claiming that in just the first two weeks after implementation, the higher minimum wage for Seattle drivers caused a 30,000 order drop off.

Powell also said the increase puts delivery drivers far above the city minimum wage of $19.90 an hour.

"Dashers in Seattle earned on average $25 an hour before the ordinance went into effect. We’re now...required to pay $26.40 per hour, but that's before mileage and before tips," Powell said.

Doordash and other companies are fighting in the court of public opinion to have the law overturned, while local restaurants and gig workers grapple with added fees and falling order numbers.

The situation has some questioning if this minimum wage increase is doing what it’s supposed to: create better conditions for local gig workers.

Michelle Balzer first started working for the grocery delivery company Instacart during the pandemic, when the agency she was working for as a licensed addiction counselor shut down.

And she found that she really liked it.

"My dad was a store director my whole childhood," Balzer said. "So being in grocery stores was very comfortable for me."

That’s also when she became involved with the Seattle area “PayUp” campaign, lobbying for expanded gig worker protections, like sick pay.

"As time went on, it was really clear that these companies really aren't held to any kind of regulations or standards that typical companies are held to," she said. "And that doesn't really bode well for workers."

Balzer disagrees with DoorDash’s criticisms of the new law, and she’s skeptical of their report on its effect.

She said in one week in December, before the minimum wage increase, she made just over $400 not including tips and before taxes from her work with a few different delivery apps.

That equates to around $11.50 an hour, since Balzer worked 35 paid hours that week.

In one week in February, she made around $13.71 an hour — although she noted that most of that work was done outside of Seattle.

She also said that she hasn’t seen a decrease in orders since the new ordinance.

Seattle's minimum wage also went up this year. It bumped up to around $20 an hour on Jan. 1, and less for smaller companies.

But that minimum wage increase doesn't include gig workers.

"Gig workers are in their own class, given that they're not considered or treated as traditional employees," explained Geekwire Managing Editor Taylor Soper.

Soper said this has been a long running debate, as gig-based companies like Uber, Lyft, or Grubhub have become more popular.

The companies "use the drivers, the delivery folks to help run their business, but don't classify them as employees."

Seattle and New York City are the first two cities in the nation to pass and implement a minimum wage specifically for food gig-workers.

This new minimum wage is part of a package of city legislation called "PayUp," which encompasses a number of new ordinances, including some for sick leave, and some for worker protections.

"But the one that is causing quite a bit of debate and uproar from various stakeholders is this minimum wage ordinance," Soper said. "So we've had a little over a month of that. And I think it's important to separate the actual ordinance and the minimum wage it sets for companies like DoorDash, and Uber Eats - and the response from these companies, which was to implement this $5 fee on every order that consumers make."

Delivery companies say the fee is necessary in order to afford the new minimum wage.

Companies also have removed the upfront tipping feature for orders.

"In the past, when you were going on your phone, making an order, it would prompt you to tip at the beginning or while you were making an order," Soper said. "But now that's moved to the end of the transaction —think until after you get your food."

That could be to dissuade tipping, Soper said. Or to remove the extra cost. It may also be because tips aren't counted toward the new minimum payment required by the city.

Soper said it's too early to know the impact of this ordinance, but response he's heard has been mixed. Some gig workers say they are getting paid more per order, but they're not seeing as much work.

Soper also noted that consumers may be turning away from delivery apps when suddenly a $12 burger costs $20 or $30 with added fees.

"That in turn decreases the demand for the restaurants," he said. "Some restaurants rely on these delivery apps."

Soper said that DoorDash told him that, as of now, they have no plans to remove the fee in the future.

He added that some companies or critics of the ordinance are calling this impact the unintended consequence of the wage increase. But he's not so sure.

"Is that how much DoorDash and Uber need to help cover these increased labor costs they have? Is this part of an economic decision?" Soper said. "Or is this a political move to get some shock value, to force restaurant owners to stand up and say, 'We don't like this law'? To have consumers complaining to the city council about how they can't use these apps anymore?"

Overall, gig worker Michelle Balzer said she’s happy with the new ordinance.

But she also said that, while the minimum wage increase is helping, there are plenty of other challenges being a gig worker.

Companies are often unclear about their pay structure, Balzer said — how much of your paycheck is mileage or added pay, versus the base fee for the delivery.

And she said that the app doesn’t tell you what you’re picking up in advance or if it will actually fit in your car.

But one of the biggest issues is job insecurity.

"One of the biggest things you will always see if you are ever in a gig worker group, whether it be on Reddit or Facebook or anything, you will see 100 million people commenting, don't ever make this a full-time job don't depend on this for a living, it can be taken away in a heartbeat," Balzer said.

She said her Instacart account was deactivated due to a customer complaint for most of January. The customer claimed Balzer had chipped their driveway, which she disputed.

Instacart reactivated her account a few weeks later. But that deactivation was devastating, Balzer said.

"I missed mortgage payments, car payments, bills, I mean, I don't have unemployment and we don't make enough to actually have an emergency fund," she said. "And so that really kind of drove home the fact that they that we don't exist to them. Gig companies don't really look at us as people with stories, we are just a number. We're just a driver or just a shopper. We don't have a name. There's no emotional connection there."

Seattle has a new law that requires apps to be clearer about their deactivation policies and outlaws certain deactivations, but that doesn’t take effect until 2025.

Balzer said she plans to return to her work as an addiction counselor, and to go back to school for a master’s in social work. But she’ll also keep doing delivery driving on the side.

"Because I love it," she said. "I really, really do."

And her gig work helped her find a new passion, too.

"I always wanted to do politics," Balzer said. "And so it's interesting that through the gig workers, how I fell into the hole a little bit. So I definitely see myself helping to kind of improve what's going on in Seattle, because it's kind of a mess."