The Left’s War on Gig

In Seattle, a 30-minute Uber ride cost an average of $60 in 2025. A similar-length trip set riders back $47.47 in New York City and $42.63 in Los Angeles. In Indianapolis, by contrast, a 30-minute ride ran only $28.33; in Raleigh, $30. The difference isn’t merely a matter of cost of living: the Seattle fare is more than 216 percent of the median local hourly wage, compared with about 125 percent in Indiana. Overall, ridesharing costs increased by close to 10 percent in 2025, according to an analysis by Gridwise.

Though these widely varying fares can’t be traced to any single cause, misguided government policies clearly haven’t helped. From minimum-wage mandates to tax hikes to insurance rules, on-demand platforms in blue locales around the country are being squeezed by the progressive Left’s “War on Gig.” And consumers aren’t the only ones feeling the effects. Many of these policies are pursued under the banner of protecting gig workers, but they wind up hurting the very people they’re meant to help.

Once heralded as a disruptive force that would democratize ground transportation, break up the taxi-medallion cartel, and bring the world’s cuisines to doorsteps in 15 minutes or less, the gig economy now suffers under an expanding system of rules, fees, and mandates. Overregulation is turning it into a costly, increasingly inefficient industry, even as it becomes a growing political target.

Gig companies operate as two-sided markets, connecting consumers and workers. New taxes and regulations can therefore be absorbed through lower platform margins, higher fares and fees, or fewer earning opportunities for workers. Progressive policymakers have underestimated these trade-offs and spillover effects, often reducing the flexibility and open access that make gig work attractive. Their efforts are constricting one of the digital era’s most promising economic innovations.

The Left’s War on Gig dates from at least 2018, when California’s Supreme Court issued its Dynamex decision, holding that drivers for a courier service should be classified as employees rather than independent contractors. The decision was soon codified and expanded through A.B. 5, which sought to reclassify most such contractors as full-scale employees unless they passed the so-called ABC test: they must be free from a company’s control, perform work outside its usual course of business, and operate an independent trade or business. The upshot was to make it much harder for workers—including gig workers—to qualify as independent contractors in the state.

Labor unions were active proponents of A.B. 5, seeing it as a way to grow union membership rolls, since employees could be organized, unlike independent contractors. It appeared that more states would follow California’s lead and implement stringent ABC tests, but that has not materialized broadly. Still, while the push to reclassify gig workers appears to have fizzled, the progressive campaign against gig work has merely opened new fronts.

In 2018, New York became the first city in the country to enact a minimum wage for rideshare drivers. In 2020, Seattle followed suit. Later that year, California voters passed Proposition 22, which guaranteed drivers 120 percent of the local minimum wage. (Rideshare companies were ironically the primary backers of Prop. 22, since it also exempted them from A.B. 5’s reach.)

The minimum-wage campaign quickly spread to another major corner of the gig economy: food delivery. In 2021, Gotham again became a progressive policy trailblazer, passing a first-in-the-nation minimum wage for app-based restaurant delivery workers. Seattle reprised its supporting role by enacting its own version in 2022. Recently, New York expanded the minimum wage to grocery-delivery workers.

The strongest economic case for minimum-pay rules is that platform markets may not be perfectly competitive. Network effects, opaque algorithms, and barriers to switching or multi-apping can give platforms power over pay and working conditions. Evidence from other online labor markets suggests that platforms can exercise meaningful monopsony power in some circumstances. But that does not mean that minimum-wage rules necessarily improve worker welfare. Rather, the evidence identifies a potential market failure and a proper test: whether workers’ gains from higher wages via a potential minimum wage outweigh losses from higher prices, reduced demand, and fewer opportunities to work.

When New York imposed its minimum-wage law for app-based food delivery, the market adjusted accordingly. Official data for the first quarter of 2024 showed consumer fees rising 58 percent from a year earlier and worker accounts falling 9 percent, even as deliveries increased 8 percent and hourly earnings, including tips, jumped 64 percent. By the fourth quarter, the trade-off was starker: the number of workers making deliveries had fallen 23 percent year over year, while earnings for those still working were up 84 percent and deliveries just 2 percent.

The economic trade-off, then, is more precise than saying that workers won or lost: those able to secure trips earned more, but platforms concentrated work among fewer active accounts by moving to scheduled access for delivery workers. At one point, 27,000 would-be delivery workers were mired on a wait list, effectively locked out of the market after New York’s minimum wage took effect.

Seattle’s minimum-wage experience with food delivery offers even clearer causal evidence. A 2025 NBER working paper comparing Seattle delivery workers with those elsewhere in Washington found that the city’s task-level minimum-pay rule doubled average base pay per task. But lower tips erased more than a third of that gain, while highly active workers completed fewer monthly tasks. The result was no increase in their overall monthly earnings.

Unpaid idle time also increased, as did distances driven between tasks. The NBER authors attributed this outcome to free entry into the labor market: higher per-task pay attracted more workers, leaving more of them competing for a limited pool of deliveries. Workers consequently completed fewer tasks and spent more unpaid time waiting between them, offsetting the gains from higher per-task pay.

Tips introduced another trade-off. Some have argued that Seattle’s decline in tips resulted from platforms moving their in-app tipping prompts until after checkout, in response to the wage rules. New York City, confronting similar changes after its own mandate, required food-delivery apps to offer a pre-checkout tipping option, including a selectable 10 percent tip. In the four weeks after the rule took effect, average tips rose from $1.18 to $2.29 per delivery. But the policy also raised the effective cost of delivery for consumers and doubtless added to New Yorkers’ growing tip fatigue.

New York’s wage mandate produced yet another response. With access to delivery work increasingly scarce, platforms had greater incentive to reserve limited slots for more productive workers. Reports surfaced of 50 to 70 drivers per day being deactivated from popular gig platforms, presumably because the platforms were trying to get potentially more productive drivers off the wait list.

Progressive New York officials responded by targeting platforms’ long-standing discretion to deactivate gig workers. A new ordinance decreed that platforms could remove drivers only for “just cause” or a “bona fide economic reason.” For deactivations based on economic grounds, platforms must show “a proportionate reduction in volume of sales or profit within the fiscal quarter prior to the deactivation”—though what constitutes a “proportionate reduction” is far from clear.

Minimum-wage policies are not the only factor driving up costs. Insurance mandates also play a significant role, with some of the most expensive concentrated in deep-blue jurisdictions. According to Uber, about one-third of rider fares in states like New Jersey and California goes toward insurance-related costs. In California and New York, rideshare companies must maintain liability coverage of at least $1 million per trip, far above the minimum required for personal vehicles. Many states also mandate uninsured and underinsured motorist coverage for rideshare, reaching as high as $1.25 million in New York and $1.5 million in New Jersey.

These high coverage levels can also make rideshare policies attractive targets for fraud and litigation abuse. Recent cases have involved staged accidents, inflated medical bills, unnecessary treatment, and fraudulent injury claims aimed at securing large insurance payouts. Higher litigation and claims costs ultimately feed into higher fares, as a result of social inflation—the tendency of liability awards and related costs to rise faster than general inflation.

Another looming source of rising costs is the growing unionization of gig work. In 2024, Massachusetts became the first state to let rideshare drivers unionize; California followed in 2025, and Illinois joined them earlier this year. These laws generally require only 25 percent to 30 percent of workers to support a union for certification, after which it can bargain on behalf of all rideshare drivers in the state. This model, known as sectoral bargaining, organizes workers across an industry rather than company by company. Long popular in Europe and elsewhere, sectoral bargaining is gaining a foothold in the United States.

Worse yet, these sectoral-bargaining laws also introduce binding-interest arbitration into the rideshare industry. If a company and certified union cannot reach a contract within several months, a government-backed arbitration panel can eventually be appointed to impose terms on both parties. A longtime union policy priority, binding-interest arbitration has been largely unprecedented in the U.S. private sector until now.

Negotiating—and potentially imposing—sector-wide rules on gig workers will likely produce more one-size-fits-all standards. That could push platforms toward scheduled access, capping the number of active drivers to control labor costs and making gig work resemble traditional employment. Minimum-wage mandates have already produced similar effects, as we have seen.

Flexibility is the top reason workers choose gig work. More than 60 percent cite it as the main attraction, rising to nearly 70 percent among those with children. A single mother who logs on to make a few deliveries while her son finishes soccer practice may lose that opportunity if scheduled access locks her out of the app.

The flexibility benefit is not merely anecdotal. Using Uber driver data, researchers estimated that real-time flexibility generated more than twice the worker surplus of a fixed-schedule arrangement; at prevailing wages, drivers would cut their hours by more than two-thirds under fixed schedules. The estimate does not settle every question about gig-job quality, but it shows that scheduling autonomy is an economic benefit that policymakers should take seriously.

Governments continue to target gig work for special taxes, too. This summer, the Washington, D.C., city council released a budget that included a 20-cent surcharge for delivery orders in the District. It applies not only to restaurant delivery but also to delivery of groceries, parcels, and beverages. The tax is a thinly veiled attempt to help plug the District’s massive budget gap, which currently sits at $1.1 billion.

Similar efforts have taken hold elsewhere. After passing its minimum wage for delivery, the Seattle City Council decided that it needed five new full-time government employees to implement the law, projected to cost up to $1.56 million annually. To fund these positions, the council voted to levy a 10-cent fee on deliveries, which took effect in 2025.

These add-on charges hit lower-income consumers hardest. A fixed fee consumes a larger share of a poorer household’s disposable income and adds proportionately more to a smaller order. Even before New York City enacted its minimum-wage ordinance, a city study found a clear income-based disparity in restaurant delivery. When the average order cost $23.35, residents of the 20 highest-income zip codes ordered delivery once every 20 days, compared with once every 33 days in the 20 lowest-income zip codes. With delivery costs rising after the wage ordinance, that disparity may have widened—and the city has now extended similar mandates to grocery delivery.

A 20-cent delivery tax, or marginally higher food prices after a minimum-wage hike, may hardly register with a D.C. attorney ordering lunch at his K Street office or a Wall Street financier expensing a catered work banquet. But it matters to a retired janitor in Anacostia or the Bronx who can no longer drive and relies on grocery delivery. In Minnesota and Colorado—two blue states that enacted gig-delivery taxes in recent years—about a third of voters reported being less likely to order food delivery because of the new fees.

Progressives show little sign of backing down from the War on Gig. In 2024, the Seattle City Council president tried to reform the city’s delivery minimum-wage ordinance, only to encounter fierce resistance before the effort stalled. This summer, Massachusetts certified the nation’s first statewide rideshare drivers’ union under its 2024 sectoral-bargaining law—the largest private-sector union-organizing effort since Ford Motor Company was unionized in 1941. In September, California officially certified a statewide rideshare drivers’ union under its 2025 law.

But perhaps the most vocal anti-gig advocate is New York City Mayor Zohran Mamdani. As a candidate, Mamdani pledged a crackdown on gig platforms. Once in office, he turned the city’s Department of Consumer and Worker Protection into an aggressive gig-economy enforcer. His point person at DCWP was Samuel Levine, an acolyte of Lina Khan, the Biden administration’s notoriously antibusiness Federal Trade Commission chair. Mamdani also appointed Julie Su, Biden’s former acting labor secretary, as deputy mayor for economic justice. In January, Mamdani, Levine, and Su declared a “new era of accountability” for gig companies, announcing a lawsuit against delivery platform Motoclick for allegedly stealing millions from workers. That same week, DCWP released a report accusing Uber Eats and DoorDash of using “design tricks” that reduced drivers’ tips by $550 million.

The city eventually announced $5 million in settlements with Uber Eats, Fantuan, and HungryPanda for violating New York’s minimum-wage law for food-delivery workers. The cases are difficult to evaluate without more information, but progressive boosters notably overlooked some fine print. In the Uber settlement, the city acknowledged that Uber Eats was “mostly compliant” with the law and that underpayments occurred only in weeks when workers had orders canceled—suggesting perhaps an algorithmic or implementation error rather than deliberate malfeasance.

Uber clarified that DCWP had first flagged the pay shortfall in August 2024—a year and a half before Mamdani took office—and that the company immediately agreed to correct the problem and “pay more than the amount owed.” That nuance didn’t stop Levine from triumphantly declaring: “The era of giant corporations juicing profits by underpaying workers is over.”

New York City also recently announced a $131.5 million settlement with DoorDash for underpaying workers. Again, the investigation predated Mamdani. The median payout to drivers was $48, with 65 percent of workers being underpaid by $1 or less. Su was unflinching: “[I]n this administration, if you steal workers’ wages, it’s not enough to just pay what you should have paid in the first place.”

Mamdani and his allies appear determined to use flashy press conferences, lawsuits, and high-profile settlements to crack down on gig companies. Lost in the headlines, however, is a likely consequence: higher prices for New Yorkers. Earlier this year, in response to the city’s mounting mandates, Instacart tacked on a $5.99 “regulatory response fee” to orders.

Here the regulatory ratchet may turn again. Critics have accused gig firms of using “junk fees” to raise the cost of rideshare and delivery. A prominently disclosed “regulatory response fee” would hardly seem to qualify. But with no agreed-upon definition of a “junk fee,” regulators could target the very charges that platforms use to cover the costs of earlier mandates—regulation producing new fees, which then invite still more regulation.

The War on Gig makes little sense when more promising ways to protect gig workers are available. Numerous states, for example, have enacted portable-benefits models. Though designs vary, the core idea is a worker-owned account that receives contributions tied to earnings across platforms and can fund health coverage, paid leave, retirement, and other benefits. Because the account follows the worker, coverage does not depend on remaining with a single platform, preserving the flexibility central to gig work. Portable benefits are not free: required contributions could be reflected in lower base pay, higher consumer prices, or reduced platform margins. But the arrangement addresses benefit portability without sacrificing the scheduling flexibility that many gig workers prize.

The portable-benefits model has attracted bipartisan support at the state level, with deep-red states such as Utah and Tennessee, purple states such as Pennsylvania and Georgia, and deep-blue Maryland all adopting versions of it. Early evidence is promising. In Pennsylvania, a report commissioned by DoorDash found that two-thirds of participants gained access to benefits they previously lacked, while 77 percent felt more financially secure.

The progressive Left, however, seems to be souring on the idea. Louisiana GOP Senator Bill Cassidy’s effort to advance a federal portable-benefits bill met unanimous Democratic opposition in committee. Vermont Senator Bernie Sanders lambasted it, declaring: “These bills are about giving corporations the freedom to deny workers the right to form a union.” Because independent contractors are generally excluded from organizing under the National Labor Relations Act, Sanders appears to view efforts to preserve contractor status—even while providing portable benefits—as a threat to unionization. At the state level, Wisconsin’s GOP legislature passed a portable-benefits bill, only to see it vetoed by Democratic Governor Tony Evers.

Before implementing any new gig law or rule, policymakers should consider at least five outcomes: effects on consumer prices; trip volume and wait times; drivers’ net hourly and weekly earnings after tips and vehicle expenses; the number of workers able to secure tasks; and the share of added costs absorbed by platforms or merchants.

For instance, a rule that raises pay per task but reduces the number of workers able to secure work may benefit incumbents while excluding new entrants. Other rules might increase idle time, attract a flood of new workers, and produce no net increase in overall pay. Assessing these trade-offs forthrightly would make progressive gig policies more credible over the long term.

Absent such a balanced approach, however, the Left’s War on Gig seems destined to continue—with consumers and gig workers alike paying the price.