Is DoorDash better than minimum wage? (technically…)
DoorDash is a great way to earn some extra money. But when considering any job or side hustle, you have to ask yourself how it compares to other opportunities.
Does DoorDash pay minimum wage or higher? Or are you better off looking for a part-time job? We looked into it and here’s what we found…
Does DoorDash pay minimum wage?
DoorDash drivers are not DoorDash employees but work as independent contractors. That means we’re not looking at “what DoorDash pays,” but rather what DoorDash drivers can earn. DoorDash drivers earn minimum wage.
This article describes DoorDash drivers: what they can earn, what it takes to do so, and if there are any other perks to the job.
Do DoorDash drivers make more than minimum wage?
In the U.S., delivery drivers can be classified as either employees or independent contractors—there’s a legal distinction between the two. According to the IRS, the payee (or driver) is the contractor when the payer controls the outcome of the job, not what or how it gets done.
So for contractors, the payer (in this case, DoorDash) doesn’t withhold taxes from their independent contractors, nor are they required to provide benefits. To keep drivers “on schedule,” delivery platforms often use complex systems or ratings and rewards rather than non-negotiable policies and rules.
However, some policies, such as safety and health regulations, apply regardless of employee category.
This means that DoorDash drivers who want to earn above minimum wage do so through sheer hard work. It also explains why estimates of the hourly rates DoorDash pays vary so widely. The amount a dasher earns depends on where they work, when they work, how much dashing they are prepared (or able to) put in each day, and how they deliver.
Hourly rates are also affected by weather, road conditions, job availability and tips.
Historically, dasher pay has also been manipulated by other (controversial) DoorDash tactics such as the “Withholding tips, reduced tip transparency, antitrust price fixing, listing restaurants without permission, and alleged misclassification of employees.
In the U.S., the average hourly wage for a DoorDash driver is about $13 to $19.
Read: Is Uber Eats Paying More Than DoorDash?
What is the DoorDash base salary?
Basic payments from DoorDash to Dashers range from $2 to $10 per delivery, depending on the estimated duration, distance, and “desirability” of the order. Deliveries that are expected to take more time, require Dashers to travel greater distances, and are less popular with Dashers now have a higher base salary.
Dashers also have the opportunity to earn more money through promotions.These include peak wage and challenge bonus. During busy times, Dashers can earn extra money on every delivery by offering bonuses.
The system or course rewards the most active Dashers and helps them meet a specific income goal for the week. While the “business” a location generates is predictable, it’s at best outside the driver’s control.
Therefore, the salary model consists of basic salary plus incentives plus tips. DoorDash does not provide a formula for how they calculate base pay. Instead, they provide descriptions of how this compensation is based on time, distance, and desirability.
DoorDash Express reserves the right to accept or decline delivery offers. Often they base their decision on how well the delivery quote pays the driver for the time, effort and expense.
This is where “desirability” comes in. Customer prompts are the biggest factor in determining whether an offer is acceptable or not. If the basic salary is only $2 and there are no tips, then the delivery service is likely to be rejected. In such cases, DoorDash often raises the base salary to increase the “attraction” of the order and encourage drivers to take the order.
DoorDash also often pays extra to encourage their drivers to get off at peak times when they are most needed. After all, consistent driver availability reflects a company’s good performance.
Bonuses are especially needed during bad weather, poor traffic, or crowded weekends. Rewards offered at these times are called Peak Pay rewards. However, when there are enough drivers to meet demand, the incentive dries up.
This means that the availability of incentives is important when calculating DoorDash pay, but again is not entirely within the driver’s control.
DoorDash will also (sometimes) offer challenge. These are usually monetary rewards for any dasher who can make a certain number of deliveries within a calendar month. In January 2021, the award will be $200. The required number of deliveries is 450: a substantial commitment!
Read: DoorDash App Crashing: What To Do And How To Fix It!
What is the minimum wage in the United States?
according to U.S. Department of Labor, the US minimum age is $7.25 an hour. It’s a federal law, so it applies to all states, and it has remained unchanged since 2009.
Individual states also have minimum wage laws that range from the mandatory $7.25 an hour to $15.20 an hour (in Washington DC).
There has been pressure for some time to raise the federal minimum wage to $25 an hour by 2025.At the same time, individual states have State wage increases (24 states increased hourly rates in 2021) and 26 states increased hourly rates in 2022.
What benefits does DoorDash offer drivers?
Because DoorDash Dashers are classified as independent contractors, full medical and health benefits cannot be guaranteed. However, DoorDash does have a service that supports dashers.
Currently, DoorDash is the only food delivery service offering a benefits package for its employees. Eligible Dashers can participate in the rewards program to unlock rewards such as higher pay, gas cards and DoorDash points.
DoorDash is also partnering with Stride Health, an insurance company that connects individuals with health plans covered by the Affordable Care Act (ACA). Stride Health acts as a liaison between you and your health insurance provider.
To qualify for the rewards program, drivers must meet certain mid-month requirements each month and maintain them until the last day of the month:
- Customer rating of at least 4.7
- At least 95% completion rate
- The acceptance rate is now below 70%
- 100 deliveries made in the last month
- Complete at least 200 lifetime deliveries
- Various COVID-19 related benefits
Read: Why does my Doordash keep pausing?
summarize
DoorDash employees are contractors and are therefore classified as independent workers.
This means they can pretty much set their own schedule and work goals. To get the most out of drivers, DoorDash offers a system of rewards and benefits designed to motivate drivers and keep them working hard.
Through this incentive program, individual drivers can earn minimum wage or even higher wages, and hourly wages are composed of base wages, incentive wages and tips.
