New York tried a minimum wage for delivery workers. Here's what happened.

"In New York, where a minimum wage for delivery riders and a cap on platform fees charged to restaurants were introduced together, labor productivity improved and both restaurant sales and consumer satisfaction rose."

Park Jeong-hun, a vice chairman of the Korean Public Service and Transport Workers' Union affiliated with the Korean Confederation of Trade Unions and a labor representative on the Minimum Wage Commission, made that claim in materials distributed ahead of the commission's fourth plenary session Monday. He urged the adoption of a "contract-based minimum wage" covering platform and contract workers such as delivery riders and designated drivers.

The labor community's key reference point is New York City. So what did the city's minimum pay system for delivery workers actually achieve?

The short answer: income gains for delivery workers are fairly well documented. Whether restaurant sales or consumer satisfaction improved as well is far harder to establish.

A number of analyses, meanwhile, point to side effects — higher delivery fees and a drop in the number of active couriers.

The core of the contract-based minimum wage the Korean Confederation of Trade Unions is pushing is straightforward: the legal minimum wage floor should apply not to gross earnings per delivery but to the income a worker actually takes home.

Labor groups emphasize that contract workers — delivery riders, parcel couriers and designated drivers — bear out-of-pocket costs for fuel, vehicle maintenance and insurance. Their argument is that net income, after deducting those expenses, must meet the statutory minimum wage, not gross receipts.

They also argue that waiting time between orders, travel time between restaurants and customers, and time spent preparing for work are all part of the labor process and should count when calculating minimum wage compliance. Factoring in those costs and hours, the Korean Confederation of Trade Unions estimates the appropriate minimum wage for parcel and delivery workers would be 17,468 won (about $11) per hour.

Labor groups further contend that New York City's experience shows the approach is workable in practice. They point in particular to the city's decision to pair the delivery worker minimum pay rule with a cap on platform fees charged to restaurants — arguing that regulating platform fees must accompany any income floor for platform workers if the goal is to raise worker pay without adding to the burden on small business owners.

New York City introduced the United States' first minimum pay standard for app-based delivery workers in 2023. The move came after concerns mounted during the COVID-19 pandemic that many couriers were earning below the minimum wage once vehicle maintenance costs and insurance were subtracted from gross income, even as delivery demand surged.

The system requires platform companies — Uber Eats, DoorDash and Grubhub — to pay delivery workers at least a set rate, tied to the time workers actually spend on delivery tasks. A separate measure caps the commission fees that restaurants pay to platform companies.

The income gains for delivery workers are relatively well established. An analysis of data from New York City's Department of Consumer and Worker Protection showed average hourly pay for delivery workers rose from roughly $11–$12 before the policy took effect to $19–$24 afterward. The Economic Policy Institute, a US labor and economics research organization, assessed the city's data and concluded delivery worker incomes rose 64 percent.

Some research also points to genuine productivity gains. Chamber of Progress, a US policy research organization, analyzed city data and found that waiting time for individual couriers fell while the number of deliveries completed per courier rose — suggesting platform companies improved dispatch efficiency and processed more orders within the same amount of time.

A closer look at the New York case that labor groups cite, however, reveals significant disagreement over the results.

New York City's official data focuses on delivery worker income gains and improvements in working conditions. The claims labor groups have made about rising restaurant sales and improved consumer satisfaction do not appear directly in official reports, and comprehensive official analysis of the policy's impact on restaurant revenue and consumer welfare is limited.

Platform companies and some research institutions, meanwhile, present a starkly different picture.

The Manhattan Institute, a conservative US think tank, argues the minimum pay rule produced unintended consequences. Citing New York City data and platform company analysis, the institute said the cost of using online food delivery apps rose after the policy took effect while the number of active couriers fell.

According to the institute, the number of active delivery app accounts in New York City dropped about 9 percent in the first quarter of 2024 compared with the same period a year earlier. Uber Eats said the number of active couriers fell by roughly 12,000 after the minimum pay rule was introduced. Consumer spending on delivery rose about 10 percent, while the average tip amount declined by $2.64.

At the heart of the debate over New York's experience is the question of who bore the cost. Worker incomes rose — but whether that came at the expense of platform company profits, or was passed on through higher restaurant fees and increased consumer costs, remains contested.

Labor groups counter that pairing the income floor with a fee cap can limit cost-shifting: if platforms are barred from raising commissions to pass costs onto restaurant owners, the additional expense has to come out of platform profits. Business groups, however, argue that regardless of whether a fee cap accompanies the measure, the question of whether platform workers qualify as employees must be settled first — and warn that once introduced, costs could be shifted onto platform companies, small business owners and consumers alike.

The Minimum Wage Commission holds its fourth plenary session Tuesday, with the agenda focused on extending minimum wage coverage to platform and contract workers including delivery riders, designated drivers and private tutors. The method for calculating a contract-based minimum wage and whether to pair any new system with platform fee regulation are expected to be the central points of contention.