A recent study from the Brookings Institute came to a fairly unsurprising conclusion: Unemployment may be low, but the jobs ain’t paying. More specifically, 44 percent of working people are making what’s considered a “low wage.” Those low-wage workers, more than 53 million Americans, have a median income of $10.22 an hour and earn about $18,000 a year, which means that they are not making enough to live on.
– Two-thirds (64%) of low-wage workers are in their prime working years of 25 to 54.
– More than half (57%) work full-time year-round, the customary schedule for employment intended to provide financial security.
– About half (51%) are primary earners or contribute substantially to family living expenses.
– Thirty-seven percent have children. Of this group, 23% live below the federal poverty line.
– Less than half (45%) of low-wage workers ages 18 to 24 are in school or already have a college degree.
Their analysis also noted that, although people can “upskill” and eventually get higher paying jobs, we still need people to do the low-wage jobs that they are doing.
The jobs that pay low wages would not disappear. Hospitals would still need nursing assistants, hotels would need housekeepers, day care centers would need child care workers, and so on.
It’s true! We cannot function, as a society, without the work that “low wage workers” do. Thus, they deserve a living wage. Simple as that.
At least part of the reason for why we have such low unemployment is the gig economy. Things like driving for Uber or Lyft or Grubhub or Postmates make it possible to “have a job” and at least some income, even when one is currently otherwise unemployed.
Another recent study, conducted by the workers rights non-profit Working Washington, discovered that the average employee of the restaurant delivery service Door Dash is making an average of $1.45 an hour. For reference, the minimum wage in 1968 was $1.60.
That seems bad! But because they’re “independent contractors” and not employees, these drivers are not technically entitled to receive the federal minimum wage like they would if they were actual employees.
Here are their findings:
Our analysis of more than two hundred samples of pay data provided by DoorDash workers across the country finds that DoorDash pays the average worker an astonishingly low $1.45/hour, after accounting for the costs of mileage and additional payroll taxes borne by independent contractors. Nearly a third of jobs actually pay less than $0 after accounting for these basic expenses. Just 11% of jobs pay more than the federal minimum wage of $7.25/hour, after expenses, and only 2% meet the standard of $15 + expenses. Further, jobs with higher tips still tend to include lower pay: the set of jobs with tips of less than $1 pay 1.8 times as much as those jobs with tips of more than $8, on a gross hourly pay basis.
Yep, definitely bad. And it gets worse! Here is a statement from Mariah, a DoorDash worker in Seattle;
“If my car breaks down I make $0 and I have no money to maintain my vehicle. So I sit at home and wait for the government to provide me with food stamps. I’m making $5 in an hour with three kids as a single mom. I have no money to pay bills. It takes me all day to fill up my car to keep going. I make nothing to feed my kids and I’m bringing food to other people. The $5 I made during that hour goes to gas so I can do 2 more orders in an hour to make another $5 to put more gas in to keep going.”
Not good! And here’s a statement from Lee, DoorDash worker in Hendersonville, Tennessee:
“DoorDash pay is so low that it’s a hardship to even do it. The only reason I do it at all is because the few orders where customers tip high enough to make it worth it keep me going on some of them. When you break it down, most of the orders do not pay more than two or three dollars from DoorDash! Of course I am an independent contractor so they do not pay me any benefits, any vacation, and I pay my own gas, maintenance, insurance, cell phone bill, and other expenses. It’s a hardship for me to even pay my mortgage. I have to work six days a week, ten hours a day in order to do so.”
The Door Dash payment model pays delivery people a minimum $2.00 per order and the rest of their payment model is absolutely batshit:
Customers typically pay a standard $5.99 delivery fee and a service fee of about 10%, in addition to any tip. (Promotions frequently reduce these charges, the specific rates seem to be ever-changing, and service fees can vary from restaurant to restaurant.) Restaurants typically pay a percentage of the total food order to DoorDash as well.
When a job is offered to a worker, they see a “guaranteed amount” which includes the total of DoorDash pay and any up-front tip from a customer, as well as the restaurant name, and the total distance from their current location to the restaurant to the delivery location. The guaranteed amount is not broken down into separate figures for pay and tip until the worker completes the delivery. In some cases, DoorDash shows a lower guaranteed amount instead of showing the full amount of pay plus tip when a job is offered, only revealing the true, higher total when the job is completed. (This seems designed to encourage workers to accept lower-paying jobs in the hopes they may win the lottery of an “above-guarantee” job.)
Workers have about 30 seconds to accept or reject an offer when it is made available to them. If a job is rejected, it will be offered again to a different available worker, possibly at a higher rate; the company’s pay model is designed to slowly bid up the pay attached to a job until it is accepted.
Door Dash has a history of fucking workers. They got in trouble not too long ago for using the tips customers gave drivers as part of their payment. So like, say you tipped your driver $5. That meant that was $5 that Door Dash didn’t have to pay them. They changed that policy, however, after months of bad publicity.
But they didn’t change it that much. The way the model works, it ends up so that jobs with higher tips are accepted more quickly and jobs with lower tips may end up paying more than jobs with higher tips. The whole thing is ridiculous.
The gig economy has lowered the unemployment numbers and made things a whole lot easier for a lot of consumers. We all love being able to get food from our favorite restaurant without leaving our homes, go out without worrying about a designated driver, and sending our laundry out. The convenience of it all is fantastic! But we do have some responsibilities here. One of them is to never tip less than $5. Another is to hold these companies to the fire and refuse to use them if they are not paying their workers fairly. Door Dash is clearly not doing that. Boycott them until they do.
Nick Trahair, CLM,CHA serves as General Manager of the GrandStay Hotel & Suites of Traverse City, MI.
Prior to joining the staff at the GrandStay, he served as the Regional Operations Manager for a large hospitality management company based in the Midwest and also has worked in the food and beverage management field.