Study Finds That Seattle’s New Minimum Pay Requirement for Gig Workers Failed to Boost App-Based Delivery Drivers’ Earnings

On-demand delivery services facilitated through online platforms have grown significantly in the past decade, generating work opportunities for independent drivers who can self-schedule their work. In a new study, researchers examined how a new minimum pay requirement for app-based delivery workers in Seattle, Washington, affected workers’ earnings and employment.

By comparing changes in outcomes for drivers with different degrees of exposure to delivery work in Seattle before the requirement was enacted, the study estimated the causal effects of the policy, finding that the law failed to increase drivers’ earnings and likely had minimal effect on their welfare. The findings highlight the challenges of raising pay in gig markets, where new workers can easily enter the market.

Conducted by researchers at Carnegie Mellon University, the study appears as an NBER Working Paper.

"As more and more jurisdictions consider adopting minimum pay policies for platform-based gig work, it is important to understand who bears the benefits and costs of such regulations,” suggests Brian K. Kovak, professor of economics and public policy at Carnegie Mellon’s Heinz College, who coauthored the study.

Minimum wage regulations that raise pay rates above competitive market-clearing levels often result in rationing as the quantity of labor supplied to the market exceeds available job opportunities. Most analyses of the minimum wage focus on traditional labor markets with persistent employment relationships. But in platform-mediated gig economy markets and other spot markets for tasks with free entry among workers, the impact of a minimum pay standard may differ substantially depending on how tasks are rationed.

In principle, gig economy pay regulations are intended to address low earnings for platform-based workers, who are not covered by standard minimum wage laws. But can such policies actually boost earnings for market participants?

In this study, researchers addressed this question by examining the impacts of a new task- level minimum pay standard for platform-based gig work in Seattle, Washington. The city’s App-Based Worker Minimum Payment Ordinance, which went into effect in 2024, sets minimum base pay requirements for workers performing delivery tasks on gig-work apps.

Using unique gig worker data from Gridwise, a delivery and rideshare app, from August 2023 to July 2024, the study compared earnings and employment trajectories around the implementation of the requirement for workers doing delivery work in Seattle before the new policy went into effect against workers who had been active in other parts of Washington State. Among the study’s findings:

• The new requirement raised delivery pay per task, but the increases were partially offset by a substantial reduction in average tips, a major portion of delivery pay.
  
  
• At the same time, the new law led to a reduction in the number of tasks completed by highly engaged drivers (but not an increase in exit from delivery work), completely offsetting increased pay per task and resulting in no change in monthly earnings overall.
  
  
• Drivers had more unpaid idle time and drove longer distances between tasks, but did not reduce their total time working on delivery apps and by and large did not switch to ride-hailing work.

"Based on a simple model of the labor market for platform delivery drivers, our evidence is consistent with the idea that the free entry of drivers into the delivery market drives down the task-finding rate until expected earnings return to their pre-reform level,” explains Andrew Garin, associate professor of economics at Carnegie Mellon’s Heinz College, who coauthored the study.

“Our findings are relevant to policymakers who want to raise pay for gig delivery drivers,” adds Yuan An, a PhD student in economics and technology at Carnegie Mellon, who coauthored the study. “If the market for drivers is indeed subject to nearly free entry, minimum pay policies will struggle to raise drivers’ earnings without imposing some form of entry barrier.”

The study was supported by Carnegie Mellon’s Block Center for Technology and Society.

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Summarized from an NBER Working Paper, Delivering Higher Pay? The Impacts of a Task-Level Pay Standard in the Gig Economy, by An, Y (Carnegie Mellon University), Garin, A (Carnegie Mellon University), and Kovak, BK (Carnegie Mellon University). Copyright 2025 The Authors. All rights reserved.

About Carnegie Mellon University's Heinz College of Information Systems and Public Policy

The Heinz College of Information Systems and Public Policy is home to two internationally recognized schools: the School of Information Systems and Management and the School of Public Policy and Management. Heinz College leads at the intersection of people, policy, and technology, with expertise in analytics, artificial intelligence, arts & entertainment, cybersecurity, health care, and public policy. The college offers top-ranked undergraduate, graduate, and executive education certificates in these areas. Our programs are ranked #1 in Information Systems, #1 in Information and Technology Management, #8 in Public Policy Analysis, and #1 in Cybersecurity by U.S. News & World Report. For more information, visit www.heinz.cmu.edu.