Testimony: Financial Stability and Workplace Protections for Food Delivery Workers
Irene Lew
Hearing on Protections for Delivery Workers
Before the NY City Council’s Committee on Consumer Affairs and Business Licensing
Thank you for the opportunity to testify today on the issue of workplace protections for food delivery workers. My name is Irene Lew. I am a Policy Analyst at the Community Service Society of New York (CSS), a nonprofit organization that works to advance upward mobility for low-income New Yorkers. While CSS is supportive of the entire package of bills the committee is considering today, I am focusing my testimony on two of them: Intro 2294, which would establish a minimum per trip payment for third-party food delivery workers, similar to protections that the city’s Uber and Lyft drivers already have in place; and Intro 2163, which would allow restaurants to raise the existing COVID-19 recovery surcharge from 10 percent to 15 percent on customers’ bills but require employers to pay their workers the full minimum wage of $15 an hour.
First, I would like to focus on our support for Intro 2294 and the need for this bill. While restaurants struggled to stay afloat during the pandemic without indoor dining, they increasingly contracted out food delivery operations to third-party intermediaries like GrubHub, Postmates and DoorDash, which have created billion-dollar businesses while absolving themselves of any responsibility to uphold fair labor and pay standards for their delivery workers. In an effort to increase their profits and reduce labor costs, these app companies continue to effectively exploit delivery workers by classifying them as independent contractors instead of employees. This classification not only denies these workers essential workplace rights and protections, including their right to a $15 minimum wage, but it contributes to their financial instability.
Throughout the pandemic, app-based food delivery workers have braved the risk of exposure to the virus to keep New Yorkers fed. Yet these workers—many of them people of color and low-income—continue to struggle with feeding their own families and making the rent. Based on CSS’s annual survey of low-income New Yorkers, the Unheard Third, we find that app-based gig workers experience food and housing insecurity, as well as difficulties with accessing affordable health care, at much higher rates than regular employees. Compared to regular employees, app-based gig workers were more likely to go hungry, fall behind on their rent or delay necessary medical care. App-based gig workers were also more likely to worry about their finances and their ability to make ends meet.
Establishing a minimum payment for each trip would be a small but critical first step to secure fair pay for these workers and improve their economic security. Furthermore, a recent study from the Center for NYC Affairs at the New School, UC Berkeley and the University of Chicago found that a similar minimum pay standard for ride-hail drivers raised their incomes without significantly reducing growth in trip volume.
Additionally, we support the provision in the bill prohibiting third-party food delivery services from using tips to offset these minimum payments. However, to ensure compliance with this provision and the minimum pay standard more broadly, we urge the Council to ensure that Intro 2294 is well-known to workers and fully enforced. Specifically, the bill should include language on how the city will conduct outreach– including in in multiple languages, and how the bill’s contents will be enforced by the Department of Consumer and Worker Protection. As our previous research has shown, the impact of new progressive labor standards is diluted if workers are not aware of their rights.
We would also like to express our support—and highlight the need—for Intro 2163, specifically the provision in the bill mandating restaurant employers to pay their workers a full minimum hourly wage of $15 an hour without using tips to make up the difference between the lower tipped wage of $10 an hour and the full minimum wage. Previous CSS research has shown that workers reliant on tips, including those in restaurants, suffer higher levels of poverty and hardship than workers covered by the full minimum wage. Furthermore, a recent survey conducted by One Fair Wage, an advocacy group pushing to abolish all sub-minimum wages, found that nearly 60 percent of New York City restaurant workers, whose employers were using the COVID-19 surcharge, reported that their tips declined after the addition of the surcharge—most plausibly due to customer assumptions that the surcharge went directly to workers. Guaranteeing restaurant workers the full minimum wage would help ensure predictable income and improve financial stability for this workforce regardless of changes in customers’ tipping behavior due to the temporary surcharge. Additionally, paying restaurant workers a full minimum wage is not only a matter of economic fairness but that of economic justice. Women and people of color constitute the majority of the tipped workforce and denying them the full minimum wage further marginalizes them in the labor force and more broadly in everyday life.
For much of the city’s essential workforce, including third-party food delivery workers and restaurant workers, low wages, grueling, unpredictable hours and inadequate safety standards have become the norm. And for far too long, the city has enabled food delivery platforms and other app-based gig companies to circumvent labor laws by allowing these companies to choose – with little to no oversight - how to compensate their workers and how they should be protected. The bottom line is that if we do not pass Intro 2294, Intro 2163 and the other bills in this package, we are locking thousands of hard-working New Yorkers into a state of perpetual financial instability and depriving them of basic on-the-job protections. We applaud the City Council for considering these measures and we are hopeful that they will help significantly improve the lives of the city’s food delivery and restaurant workers.