A new study of pay on apps such as Instacart and DoorDash finds that gig delivery workers make less than minimum wage on average in Seattle, after factoring in expenses.
The labor group Working Washington released the report on Wednesday, before a Seattle City Council committee vote next week on legislation to improve wages and job standards for gig workers.
The study is the latest attempt at quantifying how much gig workers actually make on the job. Seattle approved a minimum wage standard for Uber and Lyft drivers in 2020, following conflicting reports on worker pay that highlighted the complexities of establishing a minimum wage for gig workers.
The study crowdsourced job reports from 400 workers, finding that they earn $9.58/hour on average after expenses and before tips. Even with tips, about half of gig jobs yielded net earnings below minimum wage.
The minimum wage in Seattle is $17.27 for most workers, though people who receive tips and work at companies with 500 or fewer employees can be paid $15.75.
“The exclusion of gig workers from basic protections like minimum wage is the latest in a long history of excluding particular groups of workers from labor standards,” said Working Washington in a statement announcing the report.
According to a recent study by Pew Research Center, 30% of Hispanic and 20% of Black adults have earned money on gig apps, compared to 16% of adults in the U.S. overall.
Working Washington is behind the PayUp campaign to establish a pay floor of minimum wage after expenses for Seattle’s delivery app workers, and increase flexibility and transparency.
According to the report, workers with DoorDash earned the lowest average pay after expenses and before tips, at $7.97/hour. In comparison, Uber Eats paid $12.87 and Instacart paid $12.05/hour. Tips were about one-third of gross worker pay.
A DoorDash spokesperson criticized the study’s methodology, noting that the survey covered several platforms and did not reveal how many of the deliveries were with each company. Workers using DoorDash gross on average more than $28/hour, including tips and surcharges, she said.
The report calculated net earnings by subtracting mileage costs at the the rate used by the U.S. Internal Revenue Service, $0.58 and-a-half per hour. Other expenses like payroll taxes were estimated at 13% of pay. The study did not factor in time managing accounts or driving to a “hotspot” to receive offers, but pay included a temporary $2.50/trip pandemic surcharge approved by the Seattle City Council in 2020.
Paying gig workers more would be good for the economy, enabling worker wages to flow into local business, the report concluded.
Some delivery apps saw business accelerate during the pandemic. Uber’s delivery arm reported revenue of $13.9 billion in the three months ending March 31, and UberEats just completed five billion orders. DoorDash stock spiked earlier this month after it reported 35% revenue growth in the first quarter.
Only a handful of studies have examined gig worker pay, said Bryce Bennett, co-founder and CEO of Solo, a startup that provides gig workers with earning predictions and helps optimize their work day. It’s difficult to compare the new study’s conclusions with other estimates, he said. Pay and tips can vary by month and season and have fluctuated during the pandemic.
The lack of transparency about how payment is calculated by many companies also hinders efforts at quantifying wages, noted the report.
Solo recently published a blog post showing gross hourly pay of workers on various platforms, including base rate, tips, incentives and surcharges. Grubhub, Uber Eats, and Shipt had the lowest pay before expenses in the Seattle area; workers grossed $23, $22 and $20/hour on those platforms, respectively. DoorDash workers grossed on average $25.62/hour, according to Solo.
The industry-funded driver group Drive Forward also performed a survey of 800 Seattle delivery app workers in February 2021.
Drivers’ gross pre-tip earnings in that survey ranged from $15.39 to $27.18/hour, and tip earnings ranged from $11 to $28/hour. After subtracting expenses of $0.34/mile “many would fall below an equivalent to Seattle’s minimum wage,” the report concluded. Part-time drivers earned more, possibly because they timed work for peak hours.
“While we agree that gig workers need to make at least minimum wage, we don’t agree that a vast majority of drivers are under minimum wage,” said Drive Forward executive director Michal Wolfe. “Some definitely are, but not the numbers the [Working Washington] report is suggesting.”
Wolfe said that earnings standards are needed but “the PayUp proposal is not the right method.” Drive Forward has proposed alternative legislation but has “not received the same consideration,” he said.
The Working Washington study also examined marketplace apps that have various incentive structures that it said reduce worker control and pay. Pet-sitting app Rover allows workers to set their own rates, but the platform allows for payment as low as $8/half-hour in gross pay for dog walking, the study found.
A Rover spokesperson said that the platform allows workers flexibility, such as the ability to walk multiple dogs at once. The average 30-minute dog walk in Seattle in 2021 paid $16.34, according to the company.
Bennett, whose company raised $5.3 million last August and has signed up thousands of workers in the Seattle area, estimates that there are about 60,000 app-based workers in the region. His platform enables workers to juggle gigs from multiple companies to optimize their earnings, and guarantees its users a base pay for the day.
“We are supportive of initiatives and new tools and legislation that help workers embrace the flexibility they like about this type of work while also producing more stability for them,” said Bennett of the proposed PayUp legislation.
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