Technology

I think delivery workers deserve a fair, livable wage, but I am not sure that this is the way to do this.

If this goes through, I could see this playing out in a couple ways:

1. I would guess that fees go up to cover increased mandated wages. However, since the apps will not want headline costs to rise much more (already have a reputation for large markups, large percentage of fees, and consumer is getting more and more stressed), they could remove the ability to tip, and advertise that slightly higher fee is now “all-in” pricing, to keep headline costs similar on average. This is potentially detrimental to delivery workers depending on earnings/tip mix and shares that the apps skim from each.

2. Adding an additional fee per order (on average $5 per order as quoted in a NYT article) on something that has relatively elastic demand, will likely be detrimental to all involved, as volumes could drop more than the increase in price. In this scenario, everyone loses: the consumer, the delivery worker, the third party, local restaurant.

3. Adding an additional fee per order, and the apps experience little to no change in demand (relatively inelastic). This would only hurt the consumer, and would benefit delivery work and tech co’s. However, I have a hard time believing that demand for delivery is super inelastic given food inflation, state of the consumer, and generally perception on food delivery price already.

Not trying to be a corporate shill, but the economist in me is always hesitant when the solution is market interference. In reality, its probably somewhere between the extremes of 2 and 3, and determining where on that spectrum it ends up is quite nuanced.