Seattle's Gig Worker Wage Hike Backfires, Hurting Businesses and Workers

New minimum wage rules led to fewer orders and higher customer fees, according to data and local business owners.

Published on Feb. 17, 2026

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A Seattle ordinance that increased minimum wages and compensation for app-based gig workers like DoorDash drivers initially boosted their pay, but soon led to a steep decline in orders and earnings as customers faced higher delivery fees. Local businesses also reported a nearly 50% drop in sales due to the increased costs, leading to an overall decline in economic activity in the city compared to other major markets.

Why it matters

The Seattle case highlights the unintended consequences that can arise from well-intentioned policies aimed at helping gig workers. While raising wages is a noble goal, the law of supply and demand means businesses will often pass those higher costs on to consumers, potentially reducing demand and hurting the very workers the policy was meant to assist.

The details

The Seattle ordinance, which went into effect in 2024, increased the minimum wage and compensation for app-based gig workers like DoorDash drivers. At first, workers saw a rise in pay, with one driver reporting earning $58 for two deliveries that previously would have paid $17. However, the higher costs were soon passed on to customers in the form of increased delivery fees, causing order volume to plummet. One local restaurant owner estimated his business declined nearly 50% as a result. Data from DoorDash showed monthly order sales grew 20-40% in other major cities like Denver and San Francisco, but only 5% in Seattle.

  • The Seattle ordinance went into effect in 2024.
  • In early 2025, DoorDash reported monthly order sales per store increased only 5% in Seattle, compared to 20-40% growth in other major cities.

The players

Michael Lowe

A DoorDash worker who reported earning $58 for two deliveries that previously would have paid $17 due to the new ordinance.

Uttam Mukherjee

The co-owner of an Indian restaurant in Seattle who estimated his business declined nearly 50% due to the increased delivery fees from the new ordinance.

DoorDash

The food delivery company that published a report showing much slower order growth in Seattle compared to other major markets after the new ordinance went into effect.

The Intentionalist

A Seattle-based guide to small businesses that conducted a survey in late 2025 showing widespread struggles for local businesses, with 71.4% reporting decreased foot traffic and 63% seeing a decline in business.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

The takeaway

This case highlights the complex economic tradeoffs involved in policies aimed at helping gig workers and small businesses. While the intent was to boost incomes, the unintended consequence was reduced demand, hurting both workers and local merchants. It underscores the importance of carefully considering market dynamics when implementing new labor regulations.