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Illustration: Aïda Amer/Axios

DoorDash is getting renewed heat over its pay model for delivery workers, whereby customer tips can be included in guaranteed minimum earnings. Critics argue this is consumer deception, although it's fairly similar to the "tipped wages" earned by waiters in certain states.

Why it matters: It's a reputational mess for DoorDash, as the "unicorn" tries to prove that its business model can work beyond billions of dollars in venture capital subsidies.

Until 2017, DoorDash paid its “Dashers” a flat $6 fee per order, plus any tips from the customer. Then it switched to its current model.

How it works: For each delivery a Dasher accepts, the company displays a “minimum guaranteed” amount he is sure to earn, which the company says is calculated based “the estimated time and effort required to complete that delivery."

  • For example, imagine a Dasher is guaranteed $7.00 to deliver a burrito.
  • No matter what, DoorDash will contribute at least $1 to the Dasher for this burrito delivery.
    • This is similar to how restaurants in most states pay their waitstaff a base wage below the full minimum wage, no matter how much they also earn in tips.
  • The burrito recipient tips $3. This leaves a gap of $3 to reach the $7 guaranteed minimum, once DoorDash's $1 contribution is included. In this case, DoorDash provides the extra.
    • Waitstaff generally is guaranteed to make at least minimum wage, all in. So if it's a very slow night with few tips, restaurants must make up the difference.
  • If the burrito customer tips $10, the Dasher would get $11 in total, with DoorDash only kicking in its $1.

DoorDash isn’t doing itself any favors by referring to these payments as "tips," but that's primarily because many people haven't really thought too deeply about what tips really are. In this case, they are often in lieu of payments DoorDash would otherwise make to Dashers. At a restaurant, it's in lieu of wages that the restaurant would otherwise make to its waiters.

  • DoorDash says that 15% of orders receive no tips. It also says that it contributes more than the customers to the minimum guaranteed amount on 65% of orders.
  • It’s unclear for what portion of orders Dashers earn more than that guaranteed minimum.
  • The company claims that, on average, it contributes about the same to Dasher fees as it did under the old $6 model, and that average Dasher earnings are $17.50 per hour.
    • Amazon also uses this tipped wages model for its Flex delivery workers, and grocery delivery service Instacart utilized it until recently.

Despite all the money being thrown at food delivery, profitability can be elusive.

  • DoorDash and other on-demand delivery companies are shifting the true costs of delivery labor to the customer without explicitly increasing the fees — devising elaborate ways to make their math edge closer to profitability.

Go deeper

House passes $1.9 trillion COVID relief package

Photo: Screenshot via C-SPAN

The House approved President Biden's $1.9 trillion COVID relief package on a 219-212 vote early Saturday morning, sending it to the Senate for a possible rewrite before it gets to Biden's desk.

The big picture: The vote was a critical first step for the package, which includes $1,400 cash payments for many Americans, a national vaccination program, ramped-up COVID testing and contact tracing, state and local funding and money to help schools reopen.

8 hours ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 8 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.