As millions of Americans have been stuck at home for the last 6 months, with limited options for eating at restaurants, getting take-out or shopping in person, food and grocery delivery services like Postmates, Grubhub, DoorDash and Instacart have seen a massive uptick in business. The problem with delivery services like this, regardless of their obvious convenience, is that their labor practices are usually lacking in ethics. San Francisco's District Attorney Chesa Boudin announced last month that he is working on reclassifying the delivery workers that are employed by DoorDash as employees rather than "independent contractors" so the companies they work for will have to follow the state's labor laws and have access to benefits, higher wages, etc.
Many workers employed by delivery companies are immigrants or members of vulnerable populations, and are being exposed to potentially risky environments by coming in contact with customers or spending lots of time in public places. As of now, an organization like Postmates allows some partner restaurants to keep the full amount of money that the meal cost from the order instead of taking a high commission, but restaurant owners are worried that new laws mandating that delivery workers earn more once reclassified as employees will change that business model.
DoorDash has been one of the leading food delivery services in the U.S. for the last couple of years, and it's possible that SF's new motion could set an example for other companies to follow. Its current business model makes a profit by charging restaurants a 20% fee on orders, as well as a service and delivery fee for customers. "Dashers," their contracted workers, are paid based on how much they work, the distance they travel, other promotions put out by the company, and tips from customers. According to salary reports on Glassdoor, DoorDash workers make between $10 and $15 an hour, which is at or below the minimum wage in California. The reclassification of workers can help them be protected under California law, and eligible for protections they're not currently being given.
Questions:
1. How could companies like DoorDash restructure their business models to pay workers more?
2. Do you think the government should be able to control how they classify their workers?
3. Is it likely that the Attorney General's motion will pass? Why or why not?
2 comments:
I think that it is a good thing that San Francisco is considering reclassifying Doordash workers. The biggest reason why is that a business cannot hire someone and expect to have no costs to their benefits. Doordash is large enough to pay its employees who are not working because of the virus, and if they can't they can always apply for Federal payment. However, under this rule, Doordash workers would need to continue worker unless they have symptoms, since the workers themselves cannot get all the benefits without costs. They would be especially important in helping local restaurants keep business flowing, since more orders would be able to be carried out to help struggling restaurants. I think the topic this relates to the most is the Great Depression and the Federal Aid the government provided to keep the economy flowing. This would be a great example of a short term policy (not a long term policy like Social Security) that would allow for individuals to get back on their feet from this crisis. On top of all that, if we can keep as many people in the labor force as possible (with minimal risk of spread of the virus), the better. The homelessness in San Francisco is already very high, and forcing businesses like Doordash to treat their workers as employees could help to reduce further increase in homelessness and poverty within the area.
I think it would be hard for Doordash and other companies in the same niche to restructure their business models to pay their workers more, due to the fact that they don't make that much money in the first place. It would definitely be good if the workers were reclassified as employees so they can be paid more, but this would have to come at a cost; Doordash would most likely have to increase their fees for customers and restaurants in order to maintain the same profit margins as before, which are already razor thin. They could also lose business after raising their prices, with fewer customers and restaurants willing to pay for delivery, resulting in some of those workers getting laid off. There's not really an easy solution for this problem, but the issue may be forced if the District Attorney's motion gets passed.
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