Delivery people for DoorDash, the nation's most widely used food-delivery app, appeared to have won big this summer when the company agreed toin a way that significantly boosted their earnings. Yet that victory has yet to pay off, labor advocates say.
Although DoorDash's more than 400,000 delivery workers are now getting customer tips, they still earn less than the federal minimum hourly wage of $7.25 after expenses, according to Working Washington, a union-backed Seattle group that represents low-wage workers. DoorDash co-founder and CEO Tony Xu said in a blog post this week that food couriers now earn an average of $18.54 including tips, a more than 12% pay hike under the previous policy.
Launched in 2013, the company provoked public outrage this summer after a New York Times story detailed DoorDash deliverers' meager pay and tough working conditions. Drawing particular scrutiny was the platform's practice of paying workers a certain amount for each delivery, including tips — the larger the gratuity, in short, the less DoorDash chipped in to cover the base amount.
After the furor, DoorDash implemented new rules. "We know that many Dashers deliver on DoorDash to meet their financial goals, and we take that responsibility to heart," Xu wrote on Tuesday.
$7.17 an hour after expenses
In its own analysis, Working Washington found the most delivery workers aren't earning anything close to the company's $18.54 hourly number. Factoring in the per mile costs of driving, which the Internal Revenue Service pegs at 58 cents for gas and general wear and tear, DoorDash drivers make an average of $7.17 an hour, the group said. It also bashed DoorDash's opting to blend deliverers' base pay and tips, which it estimates account for an average of about 30% of their income.
The controversy over DoorDash's pay practices isn't souring Wall Street's enthusiasm for the unprofitable startup company. Investors in May valued DoorDash at nearly $13 billion, the same month it announced $600 million in additional funding. DoorDash, backed by heavyweight tech investors such as SoftBank and Sequoia Capital, has raised a total of $2 billion, according to Bloomberg News.
DoorDash did not return a request for comment.