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Seattle City Council delays decision to roll back gig worker minimum wage

caption: Within weeks of Seattle's new minimum wage for gig workers, often drivers for delivery apps, another debate has emerged over its effects. Some businesses and drivers argue that they're losing money. Other drivers say the new law is working. Seattle's City Council is now considering what to do next.
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Within weeks of Seattle's new minimum wage for gig workers, often drivers for delivery apps, another debate has emerged over its effects. Some businesses and drivers argue that they're losing money. Other drivers say the new law is working. Seattle's City Council is now considering what to do next.

The Seattle City Council postponed a planned vote Tuesday over a controversial proposal to roll back a gig worker minimum wage that was put in place earlier this year.

The new minimum wage took effect in January. It immediately prompted mixed reactions. Council President Sara Nelson introduced legislation to reduce the rate after restaurants complained about fewer orders. The businesses blamed new fees that delivery apps added to cover the costs. Still, some gig workers argue that their pay has improved under the wage hike. In a brief statement, the City Council said members would like to delay a vote to ensure they have enough time to fully consider changes to the law.

No word on when the Council will take up the matter again.

RELATED: Seattle businesses caught in tug of war between app companies and delivery drivers

Working Washington, a activist organization that favors keeping the higher wages in place, interprets the Council's "eleventh-hour postponement" a reflection of how unpopular cutting low-wage workers' pay is.

In a statement, the group said: "Ultimately, this sudden change of plans reveals what workers already knew to be true: raising wages is good for Seattle, and cutting wages is supported by no one but app corporations. And those corporations dumped hundreds of thousands of dollars into trying to mislead the public and lobbying councilmembers with the message that cutting workers’ pay is somehow good for workers, only to find out that the home of the Fight for $15 is true to its values. We all know that all Seattle workers deserve a living wage."

The Washington Alliance for Innovation and Independent Work supports the proposal to change the wage. The alliance says it includes app companies, along with small businesses and consumers.

“We are disappointed by the council’s decision to delay action on the proposed changes to the delivery pay ordinance,” said Marcos Wanless, president of the Seattle Latino Metropolitan Chamber of Commerce and member of the Alliance. “Seattle restaurants and businesses are losing millions because of this new law, and the workers this law was supposed to help are bearing the brunt of its unintended consequences. It has changed the very nature of app-based work in Seattle, reducing flexibility to work when and where you chose. To cut costs and restore orders, the City Council must step up and pass this commonsense solution."

Gig worker minimum wage in Seattle

With a more business-friendly council, the proposed overhaul has been on a fast track, which is uncharacteristic for Seattle. Supporters of the revision say livelihoods are at stake, which is driving the urgency. But critics are calling for time to evaluate the law's impacts before rolling it back.

Uttam Mukherjee and his wife opened Spice Waala in 2019, in Seattle’s Capitol Hill neighborhood, a restaurant specializing in Indian street food. He says that since January, when the new pay rate took effect, delivery orders have declined 40%. Delivery companies like Uber Eats and DoorDash had tacked on a $5 fee to each order. Customers have told Mukherjee it’s become expensive to order out. His best seller, a kathi roll, used to cost around $10. Now, it costs $20.

“The intent of this ordinance in terms of being for living wage for the gig drivers is completely right,” Mukherjee said.

But he worries the current ordinance is jeopardizing his ability to do that in his own business.

“It has put at risk the fact we can pay our employees a living wage because of the fact that our business declined so much,” he said.

Mukherjee says partnering with app-based companies has helped raise their visibility. Over the years, he says, it’s become a necessity for restaurants, especially in Seattle where customers are reliant on technology.

Mukherjee wants to see a study on the law's financial impacts to help find the appropriate solution. This, he said, would involve all parties agreeing to open their books to help start the conversation.

It’s not just restaurants feeling the pinch. The app companies also lose money when orders are down. DoorDash, one of the major platforms, anticipates a loss of more than 1.7 million orders over the course of the year. That’s why the company, along with other delivery services has called for the law’s repeal.

In a statement, DoorDash expressed appreciation for Council President Sara Nelson for helping reach a compromise that the company says will better serve Dashers, as the drivers are called, businesses, and consumers in Seattle.

Not everyone is keen on the compromise. For driver Justin Taylor, the law as it stands has boosted his pay by 25%. I spoke with Taylor as he was making a delivery in Seattle. He said the pay may not be huge, but it’s a meaningful improvement.

“I was able to actually fix my brakes, put new brakes on my car,” he said.

Taylor was a rideshare driver with Lyft but switched to food delivery during the pandemic. He said orders did go down in January when the pay raise went into effect. But he said January is usually a slow month. And demand started picking up again in March. Still, even during the slow months, he said he was earning more per order.

Alex Kim, another delivery driver, agreed. In addition, he said the law mandates that he be compensated when he waits for orders to be filled.

“It’s given me more opportunities to work because now every single offer you get is actually worth doing,” Kim said.

One key change under consideration is driver pay, from the current 44 cents per minute, to just under $20 an hour. A big concern is if people stop ordering from delivery services, restaurants will forever lose those customers.

Council President Nelson hopes revising the ordinance will turn things around.

“This is extremely important, and I can’t ignore what is going on,” Nelson said.

It’s unclear whether that and other changes will be enough to bring orders back up to convince delivery companies to drop their fees.

This story was updated to report that the council delayed its vote and to include statements from Working Washington and the Washington Alliance for Innovation and Independent Work.

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