NYC Boosts Food App Worker Wage To $20 Hr., Grubhub Lays Off 15%

In New York City, the average hourly wage for app-based food delivery workers is $7.09 The city announced that it would increase the minimum wage to $19.96 per hour for these workers.

The minimum hourly wage for people who deliver for companies like Door Dash and Uber Eats is set to increase next month from $17.96 per hour. Through April 2025, the full benefit of $ 19.96 per hour will be phased in. The minimum wage will then be adjusted to reflect the inflation rate. If Joe Biden wins reelection, then these guys will be earning $950.00 per hour by 2028.

The city said that it will also convert vacant newsstands to shelters where these workers can charge their electric bikes and phones.

When it fully phases in on April 1, 2020, the pay rate will increase from $17.96 to $19.96. The rate is also adjusted annually to account for inflation. Apps can pay their delivery workers by trip or per hour, but they must pay at least $19.96 per hour on average. Apps that pay for the entire time the worker is connected to an app (the waiting time for trip offers, and the trip time itself) must pay a minimum of $17.96/hour in 2023. This is equivalent to approximately $0.30/minute, without tips. Apps that pay only for trip time (the period between accepting a delivery proposal and dropping off the order) must pay at minimum $0.50 per minute in 2023. This does not include tips.

According to the press release, New York City has around 60,000 workers who deliver food.

Food companies are not happy. Grubhub warned that the changes would “severely limit your flexibility.” You may not have the option to decide when and how you want to work.

The company said, “We have heard over and over again that flexibility and independent are the key reasons you choose to partner with our platform. Please make your voice known today.

Grubhub has announced that it has laid off 400 employees, or 15 percent of its corporate staff. CNBC reports that Grubhub has been struggling to gain market share. Just a year after purchasing it in 2021 from a Dutch company called Just Eat Takeaway (Grubhub’s parent), the company considered selling.

Grubhub announced that its laid-off workers will receive 16 weeks of severance pay.

Grubhub’s CEO Howard Migdal stated in a memo that “it is…clear that we need to take some tough decisions to keep our competitiveness.”

It’s not clear if the minimum wage hike in New York City to $19.96 per hour for delivery drivers using apps had anything to with these layoffs. But a 300% increase in wages mandated by government for a large city like New York is nothing to laugh at.

I would be ecstatic if these drivers were to earn $20 an hour or more. You want this wage hike to happen for the right reason: a tight labour market that forces companies to pay more for skilled, conscientious employees.

A tight labor market in New York City is hard to achieve when Mayor Eric Adams of New York City welcomes tens and thousands of illegal immigrants. This flood of cheap workers makes labor even more affordable.

The results of a government that orders wage increases like this can be chaos. Customers will pay a lot for food to cover the 300 percent increase in labor costs. Where will the money come?

Oh, but if the food prices go up, less people will buy this food. This hurts everyone including delivery drivers. You can’t earn $20 an hour if you don’t have a job. My math might be wrong, but I think $7.09 per hour is better than nothing.