Latest News

Prop 22 Reversal Could Strain Food Delivery Volume With New Fees

California’s Proposition 22 ballot measure, which made it so rideshare and food delivery drivers could not be included in a state labor law, was ruled unconstitutional on Friday (Aug 20). Per this overturning, drivers for gig economy food delivery services such as DoorDash, Instacart and Uber Eats will now be entitled to the same rights and protections that employees have.

“A prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, nor does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers,” Alameda County Superior Court Judge Frank Roesch wrote in his ruling. “It appears only to protect the economic interest of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation.”

The Context

Meal and grocery delivery services were relying on this measure (which Roesch deemed unenforceable), with three of the 10 most populous cities in the United States located in the state, and with San Francisco a major market for meal delivery. In fact, major gig economy services spent more than $200 million lobbying for its initial approval.

The additional cost that this reversal places on delivery services could show up for consumers in the form of higher prices and steeper fees for meal delivery, which could prove a strain on order volume, given that meal delivery fees are already pushing the outer edge of what consumers are willing to pay for, say, one burrito.

Read more: Fixing The ‘Broken Economics’ Of Grocery Delivery

What the Experts Are Saying

“It is a blow to the gig economy model, which has been the source of great innovation for consumers and those who provide services the platform enables,” commented Karen Webster. “Until Uber, Lyft, DoorDash, InstaCart and others, people had no ability to monetize their spare capacity – easily and at their convenience – by just jumping in their car and picking up a few hundred bucks by giving consumers a ride or delivering food or groceries to those who want the convenience of delivery.”

What Consumers Are Saying

California voters passed the ballot measure by a vote of 59 percent to 41 percent. However, not all of those voters stood by their decision once the measure was in effect — many felt they had been misled.

“I definitely feel deceived,” one voter told The Washington Post. “We all felt that Prop 22 was going to help the drivers, and Uber and Lyft were going to be paying them more, when really they’re just trying to save their own pockets.”

Demand for restaurant and grocery delivery remains high. PYMNTS’ study, The Bring-It-to-Me Economy: How Online Marketplaces and Aggregators Drive Omnichannel Commerce, created in collaboration with Carat by Fiserv, finds that almost half of all consumers are ordering restaurant meals for delivery more often than before the pandemic, and 27 percent are ordering more groceries for delivery.

See also: New Study: Bring-It-To-Me Economy Ascends As Consumers Embrace Home-Centric Lifestyles

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:Latest News