DoorDash delivery workers to get option of hourly rate
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Illustration: Gabriella Turrisi/Axios
DoorDash will pay its deliverers an hourly rate if they want one, marking a new way of compensating gig workers.
Why it matters: Critics have said for years that the gig economy's pay-per-transaction system disadvantages workers, giving them less than they would make if they had more conventional jobs.
Driving the news: DoorDash announced Wednesday that it will offer a minimum guaranteed hourly rate "for time spent on a delivery — from the moment they accept an offer until it’s dropped off — plus 100% of tips."
Yes, but: The change isn't expected to result in more income for Dashers, the name the company gives to those doing the delivering.
What they're saying: "We know there are Dashers who prioritize reliability in their earnings, who simply want to get on the road and dash with an exact, upfront idea of how much they’ll earn for the time it takes to complete an order," DoorDash said in a statement. "Earn by Time was developed precisely with those Dashers in mind."
How it works: Currently, Dashers get paid per order — and that option will still be available if they pick it.
- "At the start of every dash where Earn by Time is available, Dashers can choose which earning mode they want to use — and at any time, they can end their dash and start in a new one when available," the company said in a statement.
- The minimum hourly rate is shown to Dashers upfront —"and it's calculated such that Dashers earn, on average, roughly the same whether they choose Earn Per Offer or Earn by Time," DoorDash added.
The impact: The change may not deliver extra income to deliverers, but it might still be well received.
- "Any time greater flexibility is offered to drivers, we view that as a positive," CFRA Research analyst Angelo Zino tells Axios in an email.
- "That said, we don’t think offering the additional option to 'earn by time' is something that will provide greater income to the driver but will provide more certainty to drivers looking for that benefit."
The other side: Critics say gig economy apps like DoorDash leave workers with less than they'd have if they had a steady job.
- About 1 in 7 gig workers earned less than the federal minimum wage as of spring 2020, according to the Economic Policy Institute.
💭 Axios' Felix Salmon shares this thought bubble: The indiscriminate Dashers who purportedly are being helped with this change are a bit like retail investors trading stocks with zero commission.
- The entities with information superiority — high-frequency traders in the investing world, or DoorDash itself in this case — are always going to be able to make money by taking the opposite side of the choices made by individuals without real-time access to the world’s most powerful algorithms.
