Delivering Higher Pay? The Impacts of a Task-Level Pay Standard in the Gig Economy

• In Event: Boosting Wages: The Role of Public Policy

Abstract

How does a task-level minimum pay requirement for gig workers affect their earnings and employment? We study this question in the context of a January 2024 law in Seattle that establishes a per-task minimum pay standard for app-based delivery workers. Drawing on novel cross-platform, trip-level gig activity data, we compare earnings and employment trajectories around the implementation of the law for workers who were doing delivery work in Seattle before the reform against workers who had been active in other regions of Washington State. We find that the minimum pay law raised delivery pay per task, though the increases in base pay per task were partially offset by a substantial reduction in average tips, a major component of delivery pay. At the same time, the policy led to a reduction in the number of tasks completed by highly attached incumbent drivers (but not an increase in exit from delivery work), reflecting both lower demand for deliveries in Seattle and increased competition from labor market entrants. We find limited evidence of switching from delivery to ride-hailing work. In total, we find that the policy had no net impact on the monthly earnings of incumbent delivery drivers. These results highlight the challenges of raising pay in spot markets for tasks where there is free entry of workers.

Author

• Yuan An, Carnegie Mellon University
  Presenting Author