A few years ago, Seattle imposed what amounted to a $26 an hour minimum wage for persons who deliver food for app-based services like DoorDash. Unfortunately for drivers, they don’t get paid this wage while waiting for the next order they can deliver.
Thanks to the new costs, customers say things like “I ordered a $12 sandwich. $12 grew to $32! I just deleted the app.”
Drivers say things like “Work has become slow because of the new law.” DoorDash reports 1.7 million fewer orders in Seattle in 2024. The new law took effect in January of that year.
“These are unimaginably complicated markets where the company’s main job is interfacing between restaurants and delivery workers and customers,” explains economist and Manhattan Institute research director Judge Glock. “Then you have an economically illiterate city council or mayor who thinks, basically by looking at an industry through reading the news, they can appropriately regulate the exact wage.”
A former president of Seattle’s city council, Sara Nelson, says politicians caused a problem that must be fixed. By letting the market function? No, by “better” central planning, by fine-tuning the regulatory mechanism: “If we had gotten the minimum pay standard right, we would not see the decline in the revenue.”
The market did get it right.
People who wanted flexible gig work got the work and got tips. Customers got the deliveries and gave tips. And companies had more freedom to adjust to changing markets.
If Seattle wants to return to that happy situation, it must repeal the law.
This is Common Sense. I’m Paul Jacob.
Illustration created with Nano Banana
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