
What DoorDash pays, after expenses, and what’s happening with tips - cbzbc
https://payup.wtf/doordash/no-free-lunch-report
======
boh
It's becoming abundantly clear the real innovation from on-demand services
(including ride-sharing companies), is their ability to transfer more money
from labor to capital with complex pay structures. For many if not most of
these companies, its their only means towards profitability. For instance, any
rise in revenue Uber experienced in the last 3 years was exclusively due to
cuts in pay for drivers. Tech has long lost the glow that prevented the public
from scrutinizing whether a VC subsidized, underdeveloped business model is
good for society. So far the answer seems to be no.

~~~
Balgair
I recently got into _EconTalk_ and burned through a few of their podcasts [0].
Roberts mentions his 'distain' for the minimum wage a fair bit during the
shows. Many economists do not like the minimum wage at all for many reasons.

However, with these gig economy jobs, there effectively is no minimum wage.
Yes, things are murky here about the definitions of wage, employee, boss, etc.
But the effective hourly rates are all well under the minimum wage. So, these
companies can uncover the 'real' minimum wage that the market will deal with
(again, suuuuuper murky definitions).

It turns out, that number is _very_ low, so low that most people aren't
rationally taking those jobs. Factoring in depreciation, I often hear that
they loose money to work (not always, but damn close).

I wonder what Roberts has to say on how the minimum wage and the 'wage' that
these gig-econ companies pay relate.

It seems to me that having run the experiments now, the theories that the
economists that Roberts is like, well, maybe they should update those ideas.

[0] Excellent deep dives with interviewees, highly recommended:
[https://www.econtalk.org/](https://www.econtalk.org/)

~~~
xyzzyz
_It turns out, that number is very low, so low that most people aren 't
rationally taking those jobs. Factoring in depreciation, I often hear that
they loose money to work (not always, but damn close)._

This is simply hard to believe. There are over a million driving for Uber. An
overwhelming majority of them must be making money, because the idea that any
significant fraction of a million of people is in the red at the end of a year
simply is ludictious. Sure, they might be making less than they think after
accounting for operating costs, insurance and depreciation, and they might be
making less than they would had they got a regular job, but they cannot
possibly be actually losing money.

~~~
Seenso
>> It turns out, that number is very low, so low that most people aren't
rationally taking those jobs. Factoring in depreciation, I often hear that
they loose money to work (not always, but damn close).

> This is simply hard to believe. There are over a million driving for Uber.
> An overwhelming majority of them must be making money, because the idea that
> any significant fraction of a million of people is in the red at the end of
> a year simply is ludictious.

I think the error you're making is the assumption that everyone in the market
is a rational actor with good information and understanding, so that evidence
of particular market behavior is evidence that it's rational and beneficial to
the person doing it.

It's very believable to imagine gig economy jobs where the workers typically
lose money doing them, but it takes them a a long time to figure that out,
because the pay is obvious but much of the expense is obscured. Fresh, naive
marks take over for those workers who get wise and drop out, maintaining the
population of workers. The combination of corporate marketing and desperate
hope then help maintain a supply of fresh, naive marks.

~~~
xyzzyz
Million of people are not rational and naive? I doubt that.

Look, the costs with Uber are pretty straightforward: you have car payments,
insurance, periodic maintenance and finally gas. People really aren’t too
stupid to realize that their Uber income doesn’t cover their car payment.

IRS has a nice estimate of average cost of driving, it’s 58 cents per mile. If
you are doing more than that, you are making money, and at Uber you make
significantly more than that.

~~~
brianwawok
The cost to run and maintain a car is not uniform however. The per mile cost
of a 2019 Escalade is not the same as a 2016 Prius.

There is room for profit I am sure, but also lots of ways to wear out your car
many years earlier than you had expected to.

------
marcell
> “These orders don’t pay for our expenses or our time. We actually lose money
> when we take those orders. If I pick up an order that is 10 miles away and
> deliver it 6 miles I’m traveling 16 miles for a $3 order — so I have lost
> money. I’m in the negative when I account for gas, wear and tear, and other
> expenses. Not to mention my time.”

This begs an obvious question: why are people choosing to do this if it pays
$0/hr? It’s voluntary. Can they find something better to do with their time?

~~~
cc439
"However, if a worker rejects too many jobs too frequently, they may receive
fewer job offers as a result."

They take those jobs because they lose all access to the chance of profitable
jobs otherwise. The people working for door dash aren't exactly the sort of
person with the ability to fully understand probabilities and statistics
either. I'd say it's fair to assume their business model works by bullying the
same psychological behaviors as videogame loot crates, lottery tickets, and
casinos. That one huge order that pays $30 after tips quiets the anxiety of
losing money on the previous ten orders even if the actual math places the
driver in the red. Most people have a very poor sense for overhead costs like
vehicle maintenance. The link between miles driven and the rate of repairs
required just isn't there.

~~~
vector_spaces
I've worked these gigs before, and so have friends of mine with advanced STEM
degrees. Sometimes you are stuck between a rock and a hard place (usually you
are, if you're low income) and your current dilemma is between not being able
to afford your rent tomorrow or food tonight, and working some exploitative
app gig like this. So cool the condescension. Poor folks -- even those with
really low numeracy -- are generally extremely aware that these gigs are
exploitative and not sustainable income sources in the long run and see the
scam a mile away. In my experience it's folks who haven't been poor who don't
have a good sense for how expensive it is to be poor, for how difficult it is
to make long term decisions, and the intractability of problems you have to
solve just to get by sometimes

~~~
savanaly
None of all of what you wrote addresses how those folks between a rock and a
hard place will be better off not having the option to work for a given
service at all.

~~~
gvjddbnvdrbv
Because people still want food cooked and delivered and to use taxis.

If the non financially viable companies did not exist then financially viable
ones would.

~~~
ramraj07
Not completely. I remember life before Uber and seamless. I'd just stay home
and eat ramen (this is in Dallas and I didn't have a car). These businesses
did genuinely create businesses and also changed lives for many by the
service. That's not an excuse for such exploitative behavior of course.

~~~
frobozz
I remember life before Uber and I'd never heard of Seamless, until your
comment. These businesses genuinely just used VC funding and exploitative
contracts to undercut perfectly viable existing services.

Before Uber, I'd take public transport, phone for a minicab or walk to their
office to get one. (and I still do)

Before Deliveroo, I'd call the local takeaway and get them to deliver, or walk
there and collect it myself. (and I still do).

You can argue that they have improved the lives of people who find it hard to
use the phone, However, that was already solved for food delivery before these
new delivery services came along and I would be surprised if there weren't
minicab firms that accepted SMS or web bookings.

~~~
ramraj07
Looks like you haven't lived in a city like Dallas. Public transport is a joke
(which I did resort to when I finally run out of food; will take me half a day
to do groceries and I need to come back home and shower). Cabs will take
thirty minutes to come to your home and will charge outrageous amounts (4x
what Uber used to charge initially).

When I say I'd just sit at home I wasn't joking. I and many friends (mostly
women) would just not do shit most of the time and just watch TV instead. Hell
I'd go years without visiting my cousin in Plano (a suburb) because commuting
there is a multi day ordeal (I need to start from their home at 5 pm if I
needed to use public transport).

Did I and others just exploit Ubers unreasonably cheap prices? Yes. Did it
improbe our lives measurably? Also yes. If you were lucky enough to live in
New York or some city like that power to you but not every place was blessed.

~~~
frobozz
That's true. I have only lived in walkable areas. This is because I have not
owned a car until recently.

I understand that public transport and minicabs are poor in tiny villages
where the only amenities are a pub and a church, but I assume that when
something is a city, it is a large built-up area with all the normal amenities
that I expect of a city (shops, offices, entertainment, bus routes, possibly a
light railway etc.). Is Dallas really not like that? What is it? Just miles
and miles of big houses?

Out of curiosity, what caused you to live in a car-dependent area without a
car?

------
dmode
Why can’t we have normal businesses where you employ your workers and charge
your customers the real cost of the transaction ? If that is not viable, don’t
start the business to begin with. Let’s just go back to first principles, can
we ?

~~~
sschueller
We can, stop using and supporting these predatory companies.

Never use Uber, Lyft, Doordash, Uber Eats, AirBnB etc. No exception
irregardless how easy or cheap it may be. It's a small sacrifice but can and
will make a difference.

Using these services to me is like asking a waiter to pay for part of my meal.
When it comes around to paying the bill are you able to face someone and ask
them to pay for part of what they just served you knowing that they are barely
making a living?

~~~
asah
We can, but..

\- incumbent taxis are also predatory services that abuse drivers, arguably
worse than Uber/Lyft - and they're a shitty rider experience in many many
ways.

\- hotels are OK but rarely provide kitchens, let alone friendly hosts who
bake you killer banana bread (yesterday's stay)

\- delivery from individual restaurants is rarely available at all, and thus
you're going to call a Postmates/etc to help pickup. Delivery is all-but-
required when feeding a large group, e.g. work function.

~~~
throwaway55554
One has to decide, do I give up some comforts to make things better for others
or not?

I'm sure it's usually pretty easy to convince oneself that others won't give
up the comforts so nothing will change and just continue using the services.

~~~
nsxwolf
How does it make things better for those people? By taking away their
opportunity? So they go home, and rethink their life, and come up with a
better way to make money?

Great, but is taking away bad jobs really the best way to do that?

------
mabbo
Is anyone else starting to get the feeling that "gig economy" is this
generation's "multi-level marketing"?

People who don't know any better get sold on the "be your own boss, earn what
you put in" concept. Reality doesn't match expectations. The people work their
asses off and wind up with a lot less money than they expected because costs
and actual spent time aren't taken into account. The people they're working
for continue to make lots of money. People quit, but are soon replaced by the
next sucker.

MLMs still exist and are going strong, but culturally we're more aware of what
they are. But maybe we're becoming more aware of what "gigs" are.

Perhaps, and I both love and hate myself for saying this, 'the gig is up'?

~~~
umvi
There's another disturbing trend I've seen on Facebook. It's where these moms
become "entrepreneurs" but when you dig into what their business actually is,
they basically host these paid sessions on how to be an entrepreneur (setting
up branding, etc.). As far I can tell, no actual product or value is
generated, it's like a "business virus":

"I'm an entrepreneur!"

"Cool, what does your business do?"

"Help people get started on their own businesses!"

"And what do their businesses do?"

"Help even _more_ people get started on their businesses!"

~~~
hardbop200
> As far I can tell, no actual product or value is generated, it's like a
> "business virus"

I believe that is what the OP means by MLM (multi-level marketing)

~~~
wongarsu
An MLM is a regular pyramid scheme with an actual product mixed in to lend
legitimacy and to make it legal in the first place.

The proposed business virus is different. Unlike a pyramid scheme most costs
are on signup, and there are no multi-level incentive structures.

------
bobloblaw45
I drove for DoorDash for about a month. What killed me was the wait between
deliveries. I think it was like 45 minutes on average and when I did get a
delivery it was like a tiny $7 delivery. There would be 2 hour stretches of
times pretty often.

But then once in awhile I'd get a string of maybe 3 or 4 runs that paid like
$12. over 2 or 3 hours.It was too inconsistent. Had no idea if I ever got
tips, from my understanding I think the company pocketed it due to how they
were paying at the time.

The community talks about gaming the system and denying deliveries less than x
dollars but I personally couldn't bring myself to do it. And after waiting an
hour I'd be dying to get moving again anyway.

This was before all the pay drama, it sounds like they've gotten much worse.
There's just too many drivers I think.

~~~
devmunchies
>There's just too many drivers I think.

interesting, I'm desperate for more drivers.

I run a side business that delivers cookies, drivers do just under 30
deliveries a day (about 3-4 every hour) and make minimum wage plus 100% of
tips are split at the end of pay period. it ends up being about $3/delivery in
tips, which is an extra $9/hr for a total of $21/hr (minimum wage is $12). A
driver could theoretically make over $50k/yr if they worked 6 days a week, but
most choose not to (4-5 days a week).

I've put a lot of work into the software to make it as efficient as possible
so driver can get more orders and tips.

My business: [https://cravecookie.com/](https://cravecookie.com/)

~~~
ec109685
6 days a week is a lot.

~~~
devmunchies
yup, it is. but if a driver needs the money... we don't ask or expect it.

------
paxys
An interesting nugget in this otherwise okay article is the suggestion that
DoorDash is still indirectly keeping customer tips, because orders with
low/zero tips are more likely to get rejected which means that they will have
to keep increasing the base price till a driver accepts it.

As a customer I suppose I should start adding tips only after the order is
finished rather than when I place the order.

~~~
OrgNet
Why would you tip before getting service anyways? that never made sense to me

~~~
chowells
Because in the US, tips are not for service quality, they're to boost your
server's pay up somewhat closer to a living wage. Obviously they should be
banned along with the practice of adding taxes and fees on top of listed
prices, but the consumer protection lobby just doesn't have that sort of
power. They're lucky to slow down the removal of customer protections these
days.

~~~
chii
> they're to boost your server's pay up somewhat closer to a living wage.

and by doing this, you're just perpetuating the problem. If the base pay is
too low, the worker _needs_ to quit, but if you force yourself to tip just
enough to string them along, you're only kicking the can down the road.

Edit: to clarify, the tip isn't included in the sticker price of the
meal/service. Therefore, a business is indirectly mis-advertising the true
price of their product/service, and thus, gain unfair advantage in the market.
The business then surreptitiously charging you more by adding the tip, and
therefore, the true price is hidden until after you're already completed the
meal, and too late to refuse the tip.

~~~
rahimnathwani
"the true price is hidden until after you're already completed the meal, and
too late to refuse the tip"

This is only true for the first time you buy a meal in the US. After that
first experience, you know the tipping etiquette. So, at the time you peruse
the menu, you can factor in the tip you expect to leave at the end of the
meal.

However, where the real price _is_ hidden is in establishments which add a
surcharge labelled 'SF Health' or similar to the bill. This is sneaky because:

i) Unlike sales tax, the SF health mandate is not a consumption tax. It's just
a regulation that specifies the minimum an employer must contribute to
employees' healthcare costs. It's just like any other business cost, like
cooking oil or lightbulbs.

ii) some businesses declare the amount they will charge on the menu, but
usually in small writing (the most egregious example I've seen is yellow text
on a white background, on a sign near other random promotional signs at the
cash register)

\- some businesses don't tell you about it _at all_. I bought some burgers
(which were yummy) and paid by card. I had no opportunity to see the itemised
bill on the POS machine, but paid anyway because the total was in the range I
expected. Only when I received the email receipt moments later did I discover
the extra charge.

------
squiggleblaz
According to the article, the standard delivery fee is 5.99 and there's a 10%
service charge. Surely the purchaser thinks "I'm paying 5.99 to the driver and
10% to DoorDash". It feels like theft. The company is telling the customer one
thing, the driver another thing, and stealing the difference.

~~~
Spivak
I have _never_ assumed that the "delivery" and "service" fees went straight to
the driver. The "delivery fee" is the premium I pay to get my food delivered
and the "service fee" is the premium I pay for using X service to place the
order. Trying to assume anything about where each dollar goes once you pay is
a little silly. Those line items are prices for services.

I mean when you order Papa John's for example they tell you explicitly that
the delivery fee isn't a tip for the driver. In some vague but not terribly
meaningful way your delivery fee does pay for the driver's wage but so does
the every other form of revenue.

~~~
squiggleblaz
Hi, that's not what I said. If I go to AirBNB, it has a cost of the rental and
a service fee. I assume that the rental cost goes to the owner, and the
service fee goes to AirBNB.

And likewise, if there's a delivery fee and a separate service fee for a
delivery, I would assume the delivery fee goes to the one who does the
delivery and the service fee goes to the middle man. What's the point
otherwise? Why not just merge them into one single fee?

~~~
Spivak
> Why not just merge them into one single fee?

If you had to add "delivery: $5.99" and "process order through FoodApp: $1.99"
to your cart would it make more sense? They're services your purchasing. Do
you expect the money for the pizza goes to the chef?

> I assume that the rental cost goes to the owner, and the service fee goes to
> AirBNB.

Why? Hostels.ru negotiates a rate with hotel chains and then charges you as
much as they think they can get away with. No reason to think they're related.

------
kangaroozach
Sophisticated companies preying on unsophisticated small businesses (workers).
This is the same garbage that convinced many businesses that selling Groupons
was good for them when clearly it wasn’t. The same thing that gets drivers to
exchange the equity in their vehicle for money while giving away their time
for free. They optimize their business models and pricing to take the most
advantage of an endless pool of desperate individuals just seeking to get by.
Meanwhile well regarded VCs and celebs get rich before the entire model
inevitably proves to be bogus. It’s a total scheme.

But stealing tips is as low and unethical as it gets. By definition a tip is a
direct payment to the service provider. Even pooling tips is not ethical. But
literally stealing tips is false advertising. They are selling tips and
delivering something else. Call it something else, but if you call it a tip
and don’t pass 100% to the delivery person you are an unethical person. And
this is coming from a free market capitalist.

------
9nGQluzmnq3M
Can't say I'm surprised -- having people in food delivery (read: waitstaff)
work for virtually nothing and hoping to make it up in tips is entirely
consistent with the American restaurant experience. Although at least
restaurants are theoretically supposed to guarantee minimum wage, and don't
exploit the car maintenance and depreciation of their workers.

~~~
tempsy
A major negative consequence for restaurant workers as a result of food
delivery apps is that they are busier than ever because they are now
fulfilling orders all day from these apps in addition to orders from people
that walk in.

I went to Popeyes last week and there’s just a stream of receipts from online
orders constantly printing, and they have to fulfill all those while dealing
with everyone that comes in. And of course they aren’t getting paid any more
to do maybe 3-4x the work they did before these apps got popular.

In that world being paid per job seems better than making the same to do much
more work.

~~~
seibelj
Aren’t minimum wage raises responsible for this? If restaurants are forced to
pay $15 an hour minimum, how can it be profitable without them being more
productive?

~~~
chillwaves
It may surprise you to learn that most businesses employ minimal staffing no
matter what the min. wage is.

I worked for $5.25 an hour as a teenager, and that doesn't mean they just
employed more people and we all took it easy. I would challenge the assertion
that a business would not optimize worker output just because they are cheaper
(and cheaper is relative, I'm sure even when it was lower the business owners
still claimed it was too high).

Lastly, there are many ways a business divides its costs and there are many
ways to be successful, even if sharing more profits with workers. Just ask
Costco.

~~~
ec109685
Good point. Why would a business voluntarily pay more than they have to?

~~~
oarsinsync
Businesses used to be a part of their communities.

We’ve suffered a breakdown of the sense of community, and a failure in
education resulting in growth in the number of people that continue to believe
the fallacy that a business primary function is to maximise value to
shareholders.

A business is ultimately a collection of people coming together for mutual
benefit. If it stops being mutually beneficial and/or only becomes beneficial
for some people if some other people are exploited, it probably shouldn’t
continue to be.

------
uptown
Almost none of these DoorDash / Uber / Lyft drivers are doing the math with
consideration of the wear-and-tear on their vehicles, nor the increased
likelihood of accidents given they're out on the road more than they otherwise
would have been. These are net negative "jobs".

~~~
doctorOb
A job in the hand is worth two in the bush. The friends I've had who drove for
DoorDash and/or Lyft were in between proper jobs (e.g CVS and reception at a
hospital or something), and that in between period was lasting longer than
they had the savings for.

------
pithon
I had DoorDash, using my account, deliver to my friend's place once. He now
gets mail spam in my name at his house.

~~~
xmprt
That's enough of a reason for me to never use DoorDash again.

------
cold_fact
This is why when I do order from Doordash, I only tip in cash and make sure to
write it in the comments.

Still the best online delivery by me even if they are a shit company. Hate
Grubhub more.

~~~
noonespecial
I do also. As I hand them the cash I say very deliberately, "Thank you. This
is for you, not them".

I've been doing it for ubers lately as well.

~~~
millstone
Nice line, I'll borrow it. Also tip in cash, exclusively and well.

------
loceng
I think legislation is needed for 100% of "gig economy" platforms to in real-
time state to the customer exactly how much the service provider is getting
paid: how much if my Lyft driver getting - and what cut is Lyft taking, etc.

~~~
JumpCrisscross
> _in real-time state to the customer exactly how much the service provider is
> getting paid: how much if my Lyft driver getting - and what cut is Lyft
> taking, etc._

What’s the benefit of real-time reporting? Just require disclosure on the
receipt.

~~~
frandroid
That's basically real-time.

------
Balanceinfinity
It's a free country - the drivers can choose to take the assignments or choose
not to. What they (and customers) are entitled to are accurate information so
they can make choices about whether this is in their interest. It's easy to
say "Door dash should pay more," (and they probably should), but that might
cut customer usage by 40%, which means half of the people driving wouldn't be
able to drive. The one thing that Door Dash shouldn't be able to do is duck
payroll taxes, so that these people have social security benefits.

~~~
gadabout
Curious, where does 40% come from?

~~~
Balanceinfinity
hypothetical number - chosen for the sake of argument

------
no_flags
I don't think using the IRS mileage number is an accurate way to calculate
costs of operating a vehicle for a couple reasons.

Consider this report from AAA: [https://exchange.aaa.com/automotive/driving-
costs/](https://exchange.aaa.com/automotive/driving-costs/)

Notice that the cost per mile actually goes down the more miles you drive! You
have to drive 20,000 miles to get down the ballpark of the IRS number. This
indicates that expenses affected by mileage like gas, maintenance, and
depreciation are dominated by up front costs like insurance and taxes. Now
consider that most door dash drivers already chose to have a car before
working for door dash, so they will have to pay the up front costs regardless.
For this reason, I don't think $0.58 per mile is a good estimate of the
marginal cost associated with extra driving for door dash. The AAA report
estimates gas and maintenance costs per mile at $0.17 to $0.23 depending on
the type of car.

Second, I don't believe it is right to include depreciation in a household
budget because it does not manifest as an additional cost on top of the price
of the car. Unless the car is listed as a line item on your household budget,
you don't have to account for any additional loss in value. Imagine that you
bought a car in cash for $1000 and never drive it. You lose the $1000
immediately. If some years later the car is worth $0, your total cost of
ownership is still just $1000, not $2000.

I believe the fact that people still chose to work for door dash is additional
evidence that the estimated costs in this article are too high. We may not be
perfect rational actors, but most of us can tell if our bank account is going
up or down.

None of this excuses the unethical behavior of door dash, and personally I
choose not to use them. I believe tips are intended as a gift to the driver,
so it is misleading to call it a tip if the driver isn't getting it. That
said, I didn't find this analysis convincing for the reasons above.

------
koolba
Do DoorDash or if it’s competitors allow delivery drivers to set their own
prices or max distances before receiving bids?

For example, can you say in advance “ _Only accept $25+ jobs_ ” or “ _Max
distance 5 miles_ ”?

------
thomk
Yeah, f _ck DoorDash.

DoorDash is the worst of all of these types of gig services. They are
expensive, late, forget to grab items from the restaurant and they are not
careful with food.

After a few times using them (and getting a different delivery person every
time) a chilling thought occurred to me. There is nothing preventing a driver
from either eating part of your food or tampering with it. Think about that. A
total stranger is _completely alone* with your food with zero oversight.

Once I was at a Starbucks when I saw the strangest thing. Some dude rushes in
with a carryout bag and sat at the nearest table. He opened the bag, opened
one (of many) styrofoam containers and hurriedly ate only part of one meal.
Then he packaged it all back up and drove away without buying anything from
Starbucks.

At least in a restaurant you are dealing with employees and people are
everywhere. DoorDashers work for a massive faceless corporation who has been
shitty about pay and tips.

Why wouldn't they grab a bite or two?

~~~
hmschreck
The final time I ordered from DoorDash, the driver ignored directions (which
no one else had ever had issues with), didn't tell me there was something
wrong with the directions I had sent him 10 minutes in until over half an hour
after leaving the restaurant (my apartment is a 7 minute drive in normal
traffic), and I had to call him to get him to tell me that much. He refused to
listen to the directions, and when the address _that I live at_ didn't work
for him, demanded a different address. DoorDash support then demanded the
same, but I told them I was not allowing an obviously irate man to come to my
apartment. It took me 20 minutes to get them to assign a new driver so I could
give my address.

I am never dealing with them again.

------
ajcodez
I can see why they did it that way. Fixing the algorithm would require setting
the base pay relative to delivery cost and then canceling orders that don’t
tip enough to get accepted. Not exactly palatable for customers. ”Your order
was not accepted by any drivers. Try again!”

------
gerardnll
Another one of those businesses that survive by worker slavery. Shameful, they
all should go bankrupt.

Also, tips in a lot of jobs in USA are now basic for a job to be sustainable,
incredible. Maybe 'Tip' is no longer the appropriate word for that.

How are they allowed to pay such a misery?

------
didibus
I'm still confused why would people keep working for DoorDash? No other jobs
around? Would they just be unemployed if DoorDash closed down? Is it that
DoorDash actually tricks people into working for them with hope of a higher
wage which never comes?

I'm against the practices they put in place, but am more leaning on better
universal income, health, basic amenities, things like that. And I'd hope that
if that was the case, it would also mean no one works for DoorDash making 2$
an hour, since that's less then your universal benefits would even give you.
But I'm not sold on any one idea. So I'm asking to help refine my opinion. I
feel I'm missing a piece of the picture here.

------
coryfklein
Tipping is an outdated social concept that needs eliminating. If my Costco
cashier is a dick to me, I report that to his manager and he gets disciplined.
If my Costco cashier is super slow, his manager notices and he improves or
gets fired.

Now why does this whole incentive/reward model get flipped on its head when
this person is delivering food to my table (or door)? If my DoorDash driver
takes a long time, I have NO IDEA whether that's because traffic was bad,
there was snow on the road, the restaurant was busy, etc. What is even the
purpose of the tip?

I'm more and more convinced, especially after doing a 7-day cruise last week,
that tips are kept in place by the establishment merely as a way to lower
perceived prices. DoorDash wants to charge you $25 for something, but
advertise that it only costs $20. DoorDash is in a much better place than I to
detect patterns of performance in their employees, as are restaurant managers,
haircut salons, the list goes on.

In the end, the world would be a better place without tips. Those most capable
of monitoring service quality would be stuck with that responsibility, prices
would be communicated transparently, and, above all, total prices wouldn't
even change anyway!

------
birdyrooster
I recently ordered food from a Bay Area Mexican restaurant. I was floored by
the $63 total from Door Dash, so I decided to pick up the order myself. Upon
arriving to the restaurant, the price came to $60. I found that the prices at
their restaurant were higher than the DoorDash menu prices by about 15%. This
means that the restaurant is forgoing 15% for their food just to be affordable
enough to get orders.

------
cm2012
This is an incredibly open market. If someone doesn't like DoorDash's
payments, they can literally just install the Uber or Seamless or one of many
other delivery apps and deliver that way. Since DoorDash is the market leader
and does the most deliveries (according to the article), that leads me to
believe most delivery folks would rather deliver with them, and not trust
random articles like this.

~~~
notwedtm
Everything about your argument is just wrong.

------
CriticalCathed
The other thing is that these services aren't even a good deal for the
customers. I can order chinese from a local place by calling them and pay 30
instead of 20 w/ delivery, but with Doordash it ends up being almost double
not including a tip. I'm not sure where the customers are coming from outside
of drunks. It's not a good value.

~~~
notwedtm
Because you're prioritizing for value. A lot of people prioritize for
convenience.

------
ggm
We're destroying society, one working norm at a time. This is ludicrous, and
the lack of regulatory oversight of this kind of vampire game, which winds up
ripping off the food source, and the delivery agent in some wierd game of
capitalism is a huge black mark on our generations time.

I cannot think of a reason to want to take work in the developed west, and
casually turn it into this kind of serfdom. Every time I see gig economy
workers in developing world economies, I think about this, and how immoral it
is to uplift their drudgery and replace it into our context like there is no
downside.

Has anyone else here read "Down and out in Paris & London" which is Orwell's
record of his time in the Paris restaurant business, and then as a tramp (bum)
on the road between workhouses in the UK? This is what we're going back to.

This is insane. We have to stop backing the gig economy.

~~~
danans
> This is insane. We have to stop backing the gig economy

Vote to regulate it in your state like CA has started to do. Individual
behavior change won't change this system, but system wide regulatory signals
can.

------
bubblethink
I recently discovered that doordash also jacks up the prices of items. $7
sandwich = 7 + 2 in markup + 2 in delivery/service fees + 2 in tip if you tip
= 13. So you pay roughly twice the amount and everyone is unhappy at the end
other than doordash. How is this business model still working in the US ?

------
ZainRiz
> Our analysis of more than two hundred samples of pay data provided by
> DoorDash workers across the country finds that DoorDash pays the average
> worker an astonishingly low $1.45/hour

Key words being "provided by Doordash workers". Meaning at all of this
"analysis" is based on the numbers being given by the most disgruntled workers
who presumably make the least. This makes all their conclusions highly
suspect.

And if these disgruntled employees are aware that they're getting such a raw
deal from Doordash, I'm wondering what stops them from going to a different
company like Uber or Lyft instead. Those reportedly let people earn about $25
per hour (before expenses I think).

------
wrycoder
I would guess that DoorDash is very negative for restaurants and restaurant
waitstaff, also.

~~~
cm2012
That doesn't make any sense. It's a choice for restaurants to sign up and they
have like 10 services to choose from. If it's not good for the restaurants
they'll just stop using it. Any marginal delivery is pure profit for a
restaurant.

~~~
chii
> If it's not good for the restaurants they'll just stop using it.

it's not that it's not good, but that they noticed the delivery funnel is
growing (and foot-traffic funnel correspondingly shrinking). This means if
they don't participate, they risk losing this revenue stream to their
competitors (who do participate).

This is what happens when your business becomes a commodity to another
business. You have to make sure your business has a value proposition that
prevents it from becoming a commodity (or make sure you are very efficient at
production and scale up to take advantage of your product becoming a
commodity).

Edit: i suspect things like massive, efficient industrial kitchens producing
delivered food may become the new norm.

~~~
rahimnathwani
"This is what happens when your business becomes a commodity to another
business"

'Commoditize your complements' was mentioned in this 2002 article by Joel
Spolsky:

[https://www.joelonsoftware.com/2002/06/12/strategy-
letter-v/](https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/)

------
chrisseaton
Why do they do these tips?! Why not charge a total and pay all expenses and
people from that? I don't understand why the complicated setup and all the
fuss that comes from it. Seems like they create problems for themselves out of
nothing.

~~~
zamfi
Also: why is the service fee separate from the delivery fee? Why do hotels
charge an invisible “resort fee”? Why do airlines and utilities have so many
extra fees you don’t find out about until later?

These are all dark patterns that try to hide the actual cost.

If doordash was upfront, saying “your total extra charge from doordash for
delivering this to you is $25” instead of “$3.99 delivery; $12.57 service
charge; $10 tip for driver” you might be more likely to realize how damn
expensive the service is and pick up your own food.

~~~
lukeschlather
I'm not sure Doordash necessarily has that visibility. It seems like the
restaurants build a service charge into their Doordash orders that isn't
present if you go there and get a menu.

~~~
zamfi
I’m just talking about the stuff that shows up literally when I check out
using doordash. doordash knows about them, obviously, because it’s showing
them to me as line items.

Hypothetical increased prices from the restaurant are a whole extra layer!

~~~
filmgirlcw
Oh, restaurants totally change prices based on eating in or delivery. Often,
places will have different prices in different apps too — depending on what
the costs are for them. I’ve literally played arbitrage between Seamless,
DoorDash, Postmates, and a restaurant’s own website before to find the lowest
price because the price was different everywhere. There are also places that
won’t list in an app but will have delivery on their own website that is then
sourced to DoorDash.

~~~
rahimnathwani
"I’ve literally played arbitrage between Seamless, DoorDash, Postmates, and a
restaurant’s own website"

If you bought food on the cheaper platform, and tried to make a profit by
selling it for more on another platform, _then_ you would have 'literally
played arbitrage'.

It's the same as when you buy an item from an online retailer, that is shipped
directly from the manufacturer (e.g. a large ClosetMaid kit). The price at
Amazon and Home Depot might be different, even though the same company is
supplying and delivering the item to your home.

------
jariel
This model simply isn't sustainable and only cash from gullible investors,
perpetual scammy behaviour, and a never ending cycle of people trying to work
for them for a while, especially while ignoring costs such as wear and tear on
their car, and the fact they can skip all of those other things like health
insurance, training etc. - keeps it afloat.

It's time for these experiments to crash under the weight of the free market
and basic regulation.

This is not the American Dream, quite the opposite.

------
jamisteven
These "gig" and "service" companies are simply re-defining minimum wage and
taking advantage of a segment of the populace that cant get minimum wage jobs
for one reason or another. But yea, dont want 1.45 an hour then find another
job. Dont want to be broke AF then dont have 3 kids. How can anyone take the
examples in this article even remotely serious.

~~~
TrackerFF
>> But yea, dont want 1.45 an hour then find another job.

>> Dont want to be broke AF then dont have 3 kids.

Life is pretty uncertain and dynamic, it's entirely possible to be a parent
w/well paying job, until you don't have it anymore. Victim blaming is BS.

------
why-oh-why
It’s kind of surprising that anyone who works for these services for more than
one day keeps working in these conditions. If you made $50 in one day and
spent $40 in gas, why work again? Does Doordash pay more initially to “get
them hooked?”

It’s definitely predatory practices of people who don’t understand that, after
a day of work, you should have more money than what you spent.

~~~
save_ferris
In some cases, people value the flexibility. In other cases, there aren’t a
lot of better options for people.

> it’s definitely predatory practices of people who don’t understand that

I find it hard to believe that after so many gig economy apps have been
scrutinized over this, they simply don’t understand. Some of them have to
understand, and just don’t care, because they’re trying to cash in on their
equity.

------
Data_Junkie
Another system of mass stupidity. Our "leaders" should be absolutely ashamed
of this disgusting "advancement" they have allowed to perpetuate uncontrolled.
It's pathetic, and everyone knows it. Yet once again nothing will happen to
improve things, they will "tweak" the algorithm and call it a day.

------
whatitdobooboo
Some valid points maybe but the article is a little misleading, bolding the
$1.45 but then right after saying "after mileage and expenses."

Not sure what a company like doordash can do in that case, are all doordash
drivers driving fuel efficient cars?

Also, what factors in is that many people cannot afford cars that are in good
shape.

Tips aspect is inexcusable, however.

------
d0100
Why are people working for door dash with cars?

This is the kind of job for motorcycles and bycicles (in denser cities)

------
3fe9a03ccd14ca5
> _The company repeatedly defended this wildly unpopular tip-swiping pay model
> over several waves of public controversy_

The real controversy is why, in 2020 and only in the USA, do we have a
business model that offloads the employee compensation responsibility onto
customers?

------
ipince
It'd be interesting to do this analysis with other type of vehicles, like
scooters or bikes. The mileage/depreciation is substantially lower, to the
point where it might not be that bad of a pay (and if you're biking, you can
get some exercise too).

~~~
nbabitskiy
>> if you're biking, you can get some exercise too

Moscow is now full of delivery guys on bikes, sometimes electric, at ~0°C. I
wonder if delivery services advertise it as work benefits.

------
fulldecent2
Regarding IRS Standard Mileage Rates.

There are different costs to insure a vehicle based on whether it is
"personal" use or "business" use. The IRS rate does not distinguish these. Is
there any documentation on which scenario IRS is assuming this applies to?

~~~
beatgammit
I don't know, but I ran my own numbers for my car and ended up with
$0.25/mile. I counted:

\- insurance cost of second car (liability only) \- depreciation \- gas \-
maintenance and estimated repairs

This was for my car, which was ~5 years old when I got it and is very fuel
efficient. I found that depreciation makes up more than half of the total
cost, so a newer car would likely have more depreciation than an older car. I
got mine for $10k, and in 5 years, it's worth $5k. I think that's pretty
common, regardless of the age of the car, so a ~$20k car would depreciate to
~$10k in 5 years. Also, newer cars are more expensive to insure, and taking a
car to a shop is more expensive than doing it yourself.

So $0.50/mile sounds reasonable for the average, relatively new car that is
taken to the shop for maintenance and repairs. Insurance was a pretty small
item in my calculations, so I doubt the difference between corporate and
personal insurance would change the figure that much.

------
makecheck
As we get closer and closer to “no need for cash”, I find with food delivery I
always want cash around for tips because it is the only way to know for sure
what happens with the money. I shouldn’t have to do that.

------
mattmaroon
Door Dash is so fucking shady. I ordered something from a local restaurant
there. When the food was 45 minutes late, I drove there. Turns out the
restaurant had never even heard of Door Dash.

------
walterkrankheit
We have similar issues in Berlin with wildly exploited workers... the only
thing that keeps it one step above here is that they are all bicycle driven,
so fuel costs are not a factor.

------
rutherf0rd
Although the claims seem reasonable, the dataset is fairy small, 200 data
points. It would be great if they continued to build the data, and even better
if they opened it up.

------
sbr464
I’ve heard from some restaurants that the main reason for not supporting
delivery companies is the large # of chargebacks. I’d be curious to confirm.

------
wayanon
Is there no payment in the US to parents from the Gov for parents? Eg in UK
there is ‘child benefit’. An amount of money paid per child.

~~~
lr4444lr
The Earned Income Tax Credit essentially does this, as does the general tax
exemptions you can declare by having dependents.

~~~
ian0
Child benefit are payments remitted to parents regardless of working status
not a tax credit

------
synaesthesisx
This is why we need autonomous delivery services. Exploiting robots is
acceptable, exploiting humans on the other hand isn't.

I've seen a couple of these around in LA ( [https://thespoon.tech/postmates-
serve-robot-spotted-and-film...](https://thespoon.tech/postmates-serve-robot-
spotted-and-filmed-making-deliveries-in-la/) ) and can only hope they become
mainstream in the very near future.

------
fulldecent2
How can companies be incentivized to WANT to hire employees rather than having
contractors be the default choice?

------
fapjacks
This rent-seeking behavior is amplified in its ridiculousness because of how
expensive DoorDash is to begin with.

------
hurricanetc
This is supply and demand in action. From a strictly capitalist perspective
DoorDash should continue to drop wages until people stop working for them. The
equilibrium is obviously lower than their current payouts or people wouldn’t
continue driving for them.

I don’t think it is possible to make money in the gig economy driving a
vehicle. These articles talk about direct car expenses but never talk about
indirect. If you factor in vehicle depreciation I am convinced that the net
wage for driving is below $0.

------
Apocryphon
So how do other food delivery companies avoid this? Isn’t it a commodified
service?

------
thelookingglass
I wonder what that 12.6 billion market valuation will drop to after the crash

------
willart4food
It's a race to the bottom, whoever charges less "wins".

------
darkmagnus
People really need to learn to cook....

------
burlesona
What I struggle with is why anyone would deliver for Door Dash if the pay is
so bad.

The article closes with a statement that they want $15/hour plus expenses for
drivers. The obvious problem is that I can’t see customers paying that much
for delivery - ie. at those wages Door Dash can’t exist.

The fact that people choose to do the work makes me think there are people who
find it worthwhile, and I can explain a few scenarios that make a lot more
sense than the ones in the article:

I live in SF, which is only about 7mi by 7mi square, so if you do door dash
here it’s very unlikely for a delivery to require more than 2-3 mi of travel.
Further I see a lot of deliveries made on bikes, skateboards, scooters, etc.
so the cost is much lower than the suburban deliveries made by car.

I see a lot of young delivery people, who I imagine may be high school or
college students who just want a few bucks spending money without any kind of
time commitment, and maybe this works nicely for them.

Regulating the wages to try and turn door dash into a “family feeding” job
seems like it would do nothing but kill the business (and all the gig
businesses), depriving people who want that kind of ultimate flexibility of
the freedom and also depriving customers of a really convenient service.

But I _do_ think regulation could be very beneficial in creating transparency
around payment to both the customer and the gig worker. I can see no reason
the companies should be allowed to obscure what they pay their workers, where
tips for, how many miles the worker traveled on a job etc. That kind of
information is fair and reasonable to provide, and would help avoid gig
companies exploiting people who unfortunately may not understand how to
properly value their expenses.

The final thing I would argue is that it’s reasonable to prohibit _blind_
auctions, as door dash does.

Instead of randomly pairing a person to a job, giving them only seconds to
respond, and penalizing them (by not offering more) if they fail to respond,
it would be much more fair to have a real-time auction map showing all
deliveries that need to be picked up in a certain area, where they need to go,
how much the pay is, and then letting them “sit on the map” and slowly tick up
in price until a worker picks one. That’s a half-baked brainstorm so maybe
that’s not the right implementation, but my point is simply:

1\. I think regulating gig wages is a blunt instrument that would mostly end
the gig companies and possibly entrench one or two mega corps as survivors
that are still exploitive toward workers - whereas providing information
transparency could potentially preserve the good things about gig jobs while
eliminating the majority of bad outcomes for workers.

2\. The real problem seems to be that there are so many people in need of
“family feeding” jobs who are working for Door Dash etc. instead. When we talk
about a “historically low unemployment rate,” things like this make it ring
hollow to me. Clearly there are a lot of people unable to get better work, who
as a result are really hurting economically, and we need to do a better job
measuring and understanding that problem so we can respond more effectively to
it.

~~~
cc439
"The obvious problem is that I can’t see customers paying that much for
delivery - ie. at those wages Door Dash can’t exist."

I am 100% ok with DoorDash and that entire market not existing. We somehow
managed without it just 3-4 years ago and it's not like Americans need another
ridiculously unhealthy eating option provided with even greater convenience.

~~~
paxys
Pizza, Chinese food etc. delivery has existed forever, and the model for
drivers was always the same - get paid nothing and rely on customers tipping
you. Now there are billion dollar brands and fancy apps, but on the whole
nothing has changed.

~~~
frandroid
Food delivery apps have made 80% of restaurants realize that their customers
would pay $8-$10 more per order for delivery. Before that customers didn't
have the option and most restaurants just figured it wasn't for them. It's a
huge new market.

------
mnm1
This is exactly why we have labor laws, especially minimum wage laws. This
company wouldn't exist if we had properly written laws that protected all
workers, but they hide behind the excuse that people working for them are
contractors blah blah... yeah we get it and it's time to close such idiotic
loopholes. Contractor or not, at these rates, no one is independent. That's
frankly ludicrous unless someone invented a way to clone people and make them
into slaves. And the people working these sub minimum wage jobs to make a
living deserve better. They deserve the minimum wage like everyone else,
although I'm sure plenty of people here will argue that they deserve to starve
and die of treatable diseases so they can make billionaires ever so slightly
richer.

------
e_tm_
Tip in cash.

------
rdxm
The "Gig Economy" will ultimately go down in history as one of the greatest
frauds ever perpetrated on the broader public.

------
DraftDodger67
It seems like the biggest problem that 'Mariah' at the top of the article
faces is that she has too many children, no partner, and her car is too fuel
inefficient.

The best way to help people in her situation is to encourage family planning,
marriage, and cheap electric vehicles.

~~~
lobster45
Yes, this would be ideal, but what about the people who are already in this
situation? Are they a lost cause?

~~~
DraftDodger67
The taxpayer is already picking up the tab with food stamps.

------
nextlevelwizard
This is pretty simple. If you make just enough for gas and can't feed your
kids, you need to find another job.

This is exactly the same out cry every restaurant server makes: "without tips
I couldn't live! so you are responsible to tip if you eat out". When in
reality they have to make enough to keep working, so that is just social
pressure from them to bleed out money from rest of us.

In no other job would we tolerate this kind of behavior. Why should we feel
bad for these people?

------
TrackerFF
If consumers aren't willing to pay more, then I truly hope this gigging
economy goes down the drain.

I live in a country with extremely strong labor laws, and for the past 3-4
years we've seen more and more of these gigging companies / startups try, and
surprise surprise, they're fighting tooth and nail to get around labor laws -
because that's where their edge and profitability lies.

This is gonna sound harsh, but If you live in a country with abysmal labor
laws, and you're getting exploited by companies like that...well, I don't
particularly care. You need to get your laws and rights fixed, that's all I
can say.

But to bring this garbage here, that's where I personally draw a line.

