Economics Thread
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acesfull86
Well-known member
https://reason.com/2025/12/20/seattles-delivery-minimum-wage-failed-drivers-and-raised-costs/
In 2022, Seattle became one of the first cities in America to pass a minimum wage law for food delivery drivers. The law went into effect in 2024, and the results were nothing short of calamitous. Food orders plunged to unprecedented lows, delivery costs exploded, and driver earnings appeared to crater.
Now, new research on Seattle's delivery driver minimum wage ordinance shows that the law had no long-term effect on driver wages. And yet, Seattle's city council shows no signs of changing course, even with higher consumer costs and zero growth in driver pay.
Seattle's delivery minimum wage currently sits at over $26 per hour—higher than the city's general minimum wage, which will reach $21.30 in January 2026. In the first few weeks after the new minimum wage was enacted, DoorDash reported a decline of 30,000 orders, while UberEats saw a 30 percent drop in order volume. Reports indicated that drivers were earning less than half of what they had prior to the ordinance's passage.
But what was once merely anecdotal evidence now has hard economic facts to back it up. In a National Bureau of Economic Research working paper, researchers from Carnegie Mellon University unpacked the Seattle experience using cross-platform, task-level data that allowed them to track individual drivers over time.
While finding that per-task base pay doubled under the new wage, researchers also saw a corresponding decline in driver tips and a reduction in the number of tasks completed by each driver. As a result, within one month of the law's implementation, the most active drivers had experienced no increase in monthly total earnings, according to the researchers. There was also evidence of increased wait times between tasks and more idle (i.e., non-earning) time spent by deliverers.
The researchers conclude that in a labor market with free entry—which is the case with gig-based delivery work, given that new drivers can always sign up and join a platform—increases in base pay are fully offset by these declines in tips and order volume.
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A shocking result. But if we continue to judge policies on their good intentions, then I guess it passes with flying colors.
In 2022, Seattle became one of the first cities in America to pass a minimum wage law for food delivery drivers. The law went into effect in 2024, and the results were nothing short of calamitous. Food orders plunged to unprecedented lows, delivery costs exploded, and driver earnings appeared to crater.
Now, new research on Seattle's delivery driver minimum wage ordinance shows that the law had no long-term effect on driver wages. And yet, Seattle's city council shows no signs of changing course, even with higher consumer costs and zero growth in driver pay.
Seattle's delivery minimum wage currently sits at over $26 per hour—higher than the city's general minimum wage, which will reach $21.30 in January 2026. In the first few weeks after the new minimum wage was enacted, DoorDash reported a decline of 30,000 orders, while UberEats saw a 30 percent drop in order volume. Reports indicated that drivers were earning less than half of what they had prior to the ordinance's passage.
But what was once merely anecdotal evidence now has hard economic facts to back it up. In a National Bureau of Economic Research working paper, researchers from Carnegie Mellon University unpacked the Seattle experience using cross-platform, task-level data that allowed them to track individual drivers over time.
While finding that per-task base pay doubled under the new wage, researchers also saw a corresponding decline in driver tips and a reduction in the number of tasks completed by each driver. As a result, within one month of the law's implementation, the most active drivers had experienced no increase in monthly total earnings, according to the researchers. There was also evidence of increased wait times between tasks and more idle (i.e., non-earning) time spent by deliverers.
The researchers conclude that in a labor market with free entry—which is the case with gig-based delivery work, given that new drivers can always sign up and join a platform—increases in base pay are fully offset by these declines in tips and order volume.
—————
A shocking result. But if we continue to judge policies on their good intentions, then I guess it passes with flying colors.
Shocking that a right-wing economist (Daniel Lacalle) who has been in favor of Trump’s policies from the start is also in favor of his policies now.
acesfull86
Well-known member
nsacpi
Expects Yuge Games
It is interesting how the FOMC's forecasts for growth and inflation in 2025 has evolved.
In June 2024 they were forecasting 2.0% GDP growth in 2025. This edged up to 2.1% by their December 2024 forecast. Then dropped to 1.4% by June 2025 and finished the year at 1.7%.
Their core inflation forecast for 2025 rose from 2.3% in June 2024 to 2.5% in December 2024 to 3.1% in June 2025 and closed the year at 3.0%.
Looks like we will end up with weaker growth and higher core inflation than was forecast.
In June 2024 they were forecasting 2.0% GDP growth in 2025. This edged up to 2.1% by their December 2024 forecast. Then dropped to 1.4% by June 2025 and finished the year at 1.7%.
Their core inflation forecast for 2025 rose from 2.3% in June 2024 to 2.5% in December 2024 to 3.1% in June 2025 and closed the year at 3.0%.
Looks like we will end up with weaker growth and higher core inflation than was forecast.