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Government-Subsidized Takeout

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Government-Subsidized Takeout

Why are Washington and New York taxpayers subsidizing the app-based food-delivery industry? October 7, 2022
New York
Politics and law

Earlier this week, New York senator Chuck Schumer and New York City mayor Eric Adams unveiled a new urban innovation: the “first-in-nation street deliveristas hubs.” Thanks to a $1 million federal grant, New York will convert disused sidewalk newsstands into places where food-delivery workers can charge their electric bikes and rest. This idea, at first glance, appears to fit the enlightened post-pandemic philosophy of “adaptive reuse”: since people don’t buy newspapers anymore but do get grilled-cheese sandwiches delivered to their apartments in the middle of the night, why not convert city infrastructure to serve the purpose? Adams’s idea, though, is just the start of a potentially open-ended commitment to subsidize an app-based “start-up culture” that prefers to offload its costs to the government.

New Yorkers have always had food delivered to their homes, but until the past decade or so, food delivery was anything but a tech-oriented business. You collected the menus of restaurants within a few blocks of your house, and if you weren’t interested in cooking yourself, you would call one and order a delivery. The restaurant employed someone to bring such orders via bicycle, largely in return for tips. Working as a deliveryman was certainly an honorable way for someone with few language skills or without official permission to work in this country to make an off-the-books living, though it was always rife with underpayment, exploitation, and some danger. Nobody really saw it as a growth industry or a major locus of employment.

Over the past decade, however, global tech startups embraced food delivery on a mass scale. Companies like UberEats, Grubhub, and DoorDash offered New York’s affluent white-collar workers unlimited choice of food from a seemingly infinite number of restaurants. You were no longer limited to the local Thai joint; you could order from blocks, or even miles, away. When restaurants shut down in-person dining in early 2020 because of the pandemic, preparing food for delivery helped some stay in business, and New Yorkers cooped up at home didn’t have to cook every night. Fair enough, even though the apps see restaurants, in the long term, as unnecessary middlemen: Uber founder Travis Kalanick has launched a “CloudKitchen” venture that cooks food in giant warehouses for direct delivery. It’s sort of like having airplane food delivered to your house.

The problem is, though, that mass-scale food delivery is not a tech or a “work-from-home” business; it is an intensely physical occupation, with vast infrastructure needs. The only reason apps can bring food from a restaurant miles away from your house while keeping the food even slightly warm (or cold) is that in early 2020, New York State and City legalized battery-powered e-bikes. Moreover, the industry depends on tens of thousands of delivery workers—the city’s estimate is 65,000 people—who are no longer connected to a home restaurant, where they could rest between calls and use the restroom. The apps’ “independent contractors” have no home base. A few apps effectively control giant, low-wage workforces, while offloading the cost of procuring and maintaining necessary equipment and workspace to the workers themselves.

And that equipment poses a public-safety danger. E-bikes rely on sensitive batteries that must be professionally maintained and responsibly charged and stored. Instead, delivery workers, with no supervision or support, run the bikes around the clock, in all types of weather, and rely on DIY maintenance and charging via extension cord, often done inside apartment houses. Already this year, six people have died in apartment or house fires caused by e-bikes, including two small children, following five e-bike deaths last year. Before then, nobody had ever died in an e-bike fire in New York City. No other industry forces its workforce to store hazardous, toxic work products in their homes—often small, cramped, cut-up basement apartments shared by multiple unrelated adults and children. Radiology technicians do not bring their x-ray machines home, sandhogs don’t bring explosives home, and correction officers don’t bring prisoners home. The city government’s response to this new risk has been to consider gingerly the idea of banning e-bike storage from public housing, and then, faced with an outcry from the app industry’s “independent contractors,” to back off from even doing that.

The equipment also poses a personal danger. In fewer than two years, at least 16 delivery cyclists have died on New York’s streets (and at least two more have been murdered in the course of their work). The apps take no financial responsibility for these deaths, offering no death or disability benefits to surviving family members, almost all of whom live in poverty. No other industry in the city has such a high death rate. In other dangerous industries, namely construction, the state and city regulate worksites and mandate insurance for workers killed or injured.

Beyond fatal fires and crashes, the growth of app delivery poses another problem: where do tens of thousands of young men go when they’re waiting for orders, and when they need to relieve themselves? Last year, the city council passed a law requiring restaurants to let app delivery workers use their bathrooms. That makes sense, except that workers can use the bathroom only when they are there to pick up a delivery—at which time they are in a hurry, because, if they don’t make the delivery quickly, they’ll get kicked off the app.

Now, Schumer and Adams are seemingly providing a solution to yet another problem the apps have created and ignored: where do workers go when they’re in between orders, or need to charge their bikes during a work shift? Standing outside a shuttered Lower Manhattan sidewalk newsstand Monday, Adams promised to use the Schumer-procured federal grant to create a space where, as the mayor put it, “they can charge their batteries, they could take a break, they could get out of the inclement weather, they can connect to the resources of the city,” thereby turning “blight” into a “tool.”

Like many of Adams’s initiatives, this one is more of an idea than a plan. First, in response to reporters’ questions, he acknowledged that the city has no idea how many newsstands it can convert for $1 million: one, or 30? While admitting that “we don’t want to guess,” the mayor was already pledging to expand the program, with city taxpayer dollars: “if this is something we want to include in the budget next year . . . to keep expanding, we’re going to do so,” he promised.

Second, the mayor hasn’t explained how a newsstand easily becomes a bike-charging “gathering location,” as his parks commissioner described it. Newsstands are tiny structures, with protected semi-indoor space for one worker, maybe two. The design exists to accommodate a customer quickly picking up a newspaper or a pack of gum, paying, and moving on; there isn’t much space for group lingering. Newsstands are also located on crowded sidewalks, where passersby will now have to navigate bulky bikes plugged into charging stations. If the city is indeed going to build out e-bike infrastructure, it should build that infrastructure on the street, not on the sidewalk; the bikes are motorized vehicles, not pedestrians.

Finally: Why are federal and local taxpayers paying to subsidize this industry? App food delivery is a private business, created and managed by the supposedly best and brightest minds of the venture-capital-backed tech industry. As it happens, the apps are struggling to make any profit, despite record pandemic volume. But mounting losses are no excuse to avoid the core responsibilities of any viable business: procuring and maintaining the physical infrastructure necessary to engage in operations. The city government does not provide gasoline to the taxi industry or tire-changing facilities to the trucking industry. Why should it provide electricity to the e-delivery industry?

If the apps want to build out a network of charging stations and rest stops for their low-wage “independent contractors” then they should put together a business plan for such charging stations and bring that plan to the city, complete with an estimate of what they are willing to pay for valuable street space. They’ll have to compete with Amazon delivery trucks, Uber and Lyft cars, Citibike, and outdoor restaurants for scarce curb real estate. In New York, there is no free breakfast, lunch, dinner, or 2 a.m. cookie.

Photo by Lindsey Nicholson/UCG/Universal Images Group via Getty Images

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