Uber CEO claims Seattle’s minimum wage law has negatively impacted the very people it aims to help

Seattle is currently in the midst of a regulatory debate over minimum pay requirements for food delivery drivers. The Seattle City Council’s governance, accountability, and economic development committee are set to meet to discuss and possibly vote on a proposal that would revise the existing minimum wage standards for delivery drivers. Uber CEO Dara Khosrowshahi is expecting a positive outcome from this potential vote, as the current minimum pay regulations have resulted in a 45% decrease in delivery order volumes in Seattle.

Uber and DoorDash responded to the existing law by adding a $5 fee for every order, paid for by the consumer in January. However, demand has significantly dropped since then, leading to concerns over the impact of the minimum wage law on drivers. Khosrowshahi mentioned that the regulations in both Seattle and New York have hurt the people they are meant to protect, echoing sentiments expressed by DoorDash CEO Tony Xu. The new proposal aims to lower the minimum pay standards for drivers and eliminate certain requirements related to driver compensation data and the ability for drivers to sue companies over pay issues.

Critics of the new proposal, such as Working Washington, argue that this ordinance would reduce worker pay well below minimum wage. According to a report by the organization, the new legislation would result in a net pay of $13.17 per hour for drivers, due to expenses such as payroll taxes and mileage costs that drivers have to cover on their own. Some drivers have voiced support for the existing pay regulation, stating that the extra pay helps cover their expenses, while others have reported a decrease in income due to lack of orders.

Seattle and New York City have become testing grounds for the impact of labor standards in the growing food delivery market facilitated by tech companies like Uber and DoorDash. These companies have increased their lobbying efforts in Seattle in an attempt to change existing regulations, as they face challenges in complying with the current minimum wage requirements for delivery drivers. Seattle has passed several unique “PayUp” laws, including minimum wage legislation, a sick leave law for delivery workers, and an ordinance related to the worker deactivation process.

Uber’s Delivery business, which includes Uber Eats, reported a 4% year-over-year increase in revenue to $3.2 billion for the first quarter of the year. DoorDash also set quarterly records for orders and revenue, reporting $2.5 billion in revenue, up 23% year-over-year. Both companies are facing challenges with new driver wage regulations not just in Seattle, but also in other locations like Minnesota, where they have threatened to leave if new regulations are implemented. These ongoing debates highlight the complexities of regulating the gig economy and ensuring fair wages for workers in this industry.