Potential Impact of Increasing Minimum Wage for Delivery Workers
By Shawn Zar, Furniture/Seating Expert at Superior Seating
- Labor costs increase: A study by NYC Independent Budget Office found that the Potential Impact of Increasing the Minimum Wage for Delivery Workers (https://www.nyc.gov/assets/dca/downloads/pdf/workers/Delivery-Worker-Study-November-2022.pdf)
- Labor costs increase: A study by NYC Independent Budget Office found that raising the minimum wage for delivery workers to $17.96 per hour would raise restaurant labor costs by 1.5%, equivalent to an extra $1.50 per hour per worker.
- Menu price increase: The same study estimated that higher labor costs would result in an average menu price hike of 0.7%, adding approximately $0.70 per order.
- Job losses: The study projected a potential loss of 1,500 jobs in the restaurant industry due to the minimum wage increase. However, it’s important to note that this figure is an estimate, and actual job losses may vary.
- Here are some suggestions to mitigate the negative factors of increasing the minimum wage for food delivery workers:
- Restaurants: They could raise menu prices slightly to absorb some of the increased costs of paying delivery workers a higher minimum wage. However, careful consideration is needed to avoid a decrease in demand for restaurant food. Also, they will need to find a way to increase seating capacity and buy restaurant furniture. Which dramatically decreased since the COVID pandemic.
- Food delivery apps: They could increase their delivery fees to cover the increased labor costs. However, this should be done cautiously to prevent a decrease in demand for food delivery.
- Government subsidies: The government could subsidize the cost of food delivery for low-income households, ensuring that affordable food remains accessible even if the price of delivery increases.
Technological advancements: Food delivery apps could leverage technology to improve efficiency. This includes using algorithms to optimize routes and employing self-driving vehicles, which could help reduce the overall cost of food delivery despite the minimum wage increase.
Additionally, here are some supplementary suggestions:
- Restaurants: They could incentivize customers to dine in by offering discounts or free appetizers, encouraging them to choose dining in over food delivery.
- Food delivery apps: They could partner with restaurants to offer discounts on food, helping offset the increased delivery costs for customers.
- Delivery options: Food delivery apps could provide various options such as pick-up and drop-off, offering customers more flexibility and potentially reducing delivery costs.
It is crucial to recognize that there is no universal solution for mitigating the negative factors of increasing the minimum wage for food delivery workers. The most suitable approach will depend on specific circumstances. Nonetheless, the aforementioned options provide potential avenues for consideration.