Uber Technologies, Inc (NYSE: UBER), DoorDash Inc (NASDAQ: DASH), and Grubhub have made significant app changes following New York's new minimum wage mandate for delivery drivers, leading to mixed reactions from the workers.
Effective December 4, the mandate sets a base rate of at least $17.96 per hour.
While initial paychecks show increased earnings, drivers worry about long-term impacts due to these changes, Bloomberg reports.
To manage added costs, Uber and DoorDash relocated the tipping prompt on their apps to appear after customers place orders, potentially reducing tips for drivers.
Tips, once a substantial part of drivers' income, now constitute a smaller percentage, ranging from 5%-15%. This alteration is intended to maintain platform affordability but has raised concerns among drivers about decreasing overall earnings.
Moreover, higher wages mean they can recruit fewer drivers, necessitating more deliveries from a limited workforce.
Uber has implemented a $2 delivery fee, and DoorDash plans to increase prices in the coming months, Bloomberg noted.
Despite these changes, drivers believe the new minimum wage is still modest for living costs in New York.
The new wage significantly increases from the previous average earnings of $11.12 per hour with tips or $4.03 per hour without.
This reform is part of broader efforts to regulate the gig economy and protect workers, yet companies often adjust their operations to safeguard earnings.
For instance, Uber is introducing a first-come, first-served scheduling system to control driver numbers on the platform.
These measures reflect the ongoing challenge of balancing fair compensation for gig workers with platform companies' operational and financial strategies in a constantly evolving industry.
Price Actions: UBER shares traded lower by 0.73% at $61.67 at the last check Wednesday.