The Hidden Cost of Skipping the Dishes

With the rising cost of just about everything, has the point of a side hustle become moot?
Photo by Wassim Chouak on Unsplash.

The effects of the rising cost of living are being felt all around the world. Here in Newfoundland and Labrador, the cost of everything is up: rent, food, gas – essentially the cost of life. We know that inflation, supply chain issues, and labour shortages are all contributing to higher prices. While we can all agree it’s a problem, it does not change the fact that we still have to pay the bills every month. Our earnings have not risen as quickly as our spending, and it is becoming increasingly more difficult to cover the cost of basic needs. How are people in the province staying afloat? 

More Income Please

The province recently raised the minimum wage to $13.70 per hour, which is a step in the right direction. Minimum wage is the basic labour standard that sets the lowest hourly wage that an employer can pay its employees. The rate of minimum wage is determined by a formula based on the annual Consumer Prices Index (CPI). Ideally, a minimum wage should be able to provide a worker with enough income to support their basic living expenses. The reality is that on its own, a minimum wage rarely serves as a living wage. It requires some kind of supplementation, either through government support or by workers taking on additional employment. Earning extra income by way of a side hustle, a side gig, or a part-time job has become a common practice–even for workers making more than minimum wage. 

Photo by Zachary Keimig on Unsplash.

Now, with the steep increase in the cost of living, even a side hustle is not a guarantee to be enough. The growing trend of “overemployment,” where workers are taking on two or more remote full-time jobs simultaneously, is a case in point. Of course, taking on a second full-time job is not a realistic option for many. A side job is still the most accessible way to supplement primary income. These secondary, part-time, or freelance gigs usually have low-barriers for entry, and require only a small investment of time and energy or start-up cost. Most importantly, they are flexible, and able to be done outside the hours of a regular 9-5 job. They can include anything from driving, babysitting, bartending, thrift flipping, and crafting; you name it. 

Financial pressure is the primary reason for these side jobs, and this pressure has only increased with the cost of living. Never has secondary employment been more important. However, never has it been harder to earn extra cash. With the rising cost of everything, from goods and services to gas, the earning potential of these side jobs is no longer guaranteed to be enough. Not only that, some of these side jobs have become a money drain in and of themselves. In this economy, has the point of a side hustle become moot? Let’s examine the case of the food delivery driver, one of the more popular side hustles in recent years.

The Case of Skip the Dishes

Photo by S O C I A L . C U T on Unsplash.

As people isolated at home during the early days of the pandemic and restaurants shifted largely to take out, the need for delivery drivers increased. Many people with vehicles signed up to earn extra income by driving for third-party delivery apps. The biggest draw is that you can pick your own hours, which makes it easy to take shifts in between other jobs. Drivers get paid weekly, and they keep 100% of the tips from customers. It seems like a great way to make some extra cash in the off-hours of your schedule. But now with the significant increase in gas prices, is this still a viable side-gig? How much have changes in the economy affected delivery drivers? Let’s use a  Skip the Dishes driver as case study.  

To become a Skip the Dishes courier – according to the company’s official website –  you need “a reliable vehicle, a valid driver’s license, vehicle insurance, vehicle registration, and a background check. You’ll also need to have a smartphone, a data plan, a phone charger and thermal bags.” It seems simple enough: deliveries are transported by car and you would obviously need a license and an insured vehicle in order to drive food between locations. However, delivery services don’t compensate their drivers for any portion of the vehicle insurance, vehicle registration, vehicle maintenance, their cell phone or their data plans. This is already an expenditure for a driver just to start the job, even if they are already paying for those things. “In many cases, drivers have reported that they’re earning less than minimum wage after adding up all of the expenses for their vehicle,” according to bestreferraldriver.com, an advocacy site run by a community of rideshare and delivery drivers.  

As if all of these costs were not enough, they don’t even include gas– which is arguably the most expensive and unpredictable expenditure. To help with the cost of gas, Skip the Dishes does have what it calls “transit pay” which is a base fee each courier is paid depending on the time and distance of an order. Transit fees are adjusted to what Skip considers a sufficient amount to cover what the courier would be spending on gas. Skip couriers will see how much the transit fee + tip is before they accept an order, which is how much they will make in total for delivering that order. However, many Skip drivers say it does not cover the full amount they are spending on gas and the rate has not always been on par with the rising inflation. 

Drivers Pay the Piper

The Independent spoke to Stephen Rideout, a local Skip the Dishes driver based in St. John’s to get the details. You get a basic delivery fee for however many kilometers plus whatever your tip is,” he explained. “The base fee is not really justified because you might get a 10 km order, but the transit fee is only 2.99$ which doesn’t really cover the gas to get you to the restaurant, and to drop off the order to the customer.” Rideout confirmed that Skip driving relies heavily on tips more so than anything else. Transit fees won’t always be a profit when you compare it to how much you spend on gas. And, you don’t always have the option of being selective of the deliveries you take.

Rideout said, “a lot of orders you have to take because you have to keep a certain acceptance rate, even if you know it is not a profitable drive.” The acceptance rate to which he is referring is a percentage of orders a driver must accept in a shift. It has to be kept above a certain amount in order for the driver to continue being assigned more deliveries. This protocol was implemented to make sure every order gets fulfilled. By this standard, many Skip drivers know the orders they are taking are not profitable, but have to take them anyway. 

To appreciate the magnitude of how much money Skip couriers are spending on gas, I did some math. Back when gas prices were at their highest ($2.28/L), if you were to make 4 deliveries in 3 hours, using about 80 km on a car that uses 10 liters per 100 km, you would have spent about $18 for the entire 3 hours you were working. 80 km is assuming you were within city limits, not outside of St. John’s. In which case, traveling to CBS or Mount Pearl would have cost more. This is incredible considering that this money is coming out of your own pocket, just to do a side job in order to help pay for these expenses in the first place. 

If you were to do this once a week, that’s $72 a month just to pay for the gas you need to make the deliveries. This would be double for a delivery driver who would do deliveries twice a week, triple for those who deliver three times a week. Not to mention the other related expenses such as car payments, car maintenance, car repairs, car insurance, depreciation, cell phone service and incidentals. Each individual driver bears the brunt of all of these additional expenses, just for a job that was originally meant to help alleviate financial strain.

Rideout said when he was delivering full time, he would drive about 800 km per week. Using the same car as an example (one that uses 10 liters per 100 km), that would be $729.60 out of your own pocket to perform the job. Even if Skip the Dishes covers 75% in transit fees, that’s still $182.40 and that is probably coming out of the tips you’ve earned. Tips might be the main source of  income for Skip couriers, but the majority of that income is spent on the car and gas to get them.

A Flash in the Pan

Photo by Rowan Freeman on Unsplash.

“When quarantine was at its peak, I was making good money doing Skip the Dishes. I would go out for a day and make $200-$300 no problem. Now, with gas prices, it’s more expensive to deliver and people can’t really afford to tip well, so it has definitely affected the job,” Rideout said. 

Not only have gas prices affected the couriers directly, then, it’s also indirectly affecting their tips. Everyone in Newfoundland and Labrador has taken a financial hit in the past few years in one way or another. Presumably ordering take out is already a luxury, and it would be hardly surprising if people didn’t want to tip as generously on top of that. As mentioned, tips are the main profit for Skip the Dishes drivers. The price of gas is increasing their expenses, and lowering their net income. Rideout said that he doesn’t hold it against anyone for tipping low because of the economy,  “it is what it is.” 

Certainly, delivering driving in 2020 was much more profitable. It was an accessible way to make extra money, and it was mutually beneficial for drivers and customers and restaurants alike. Clearly, now it has become less profitable, less reliable, more inconvenient, and more stressful. Inflation, combined with high and fluctuating gas prices has made it particularly hard for those who depend on delivery driving for secondary or even primary income. 

For many, income earned from full-time work is no longer enough to support basic living expenses. A second job on the side appears as the only solution, and the fact that this may not even be enough either is unsettling. The prospect that side jobs may no longer effectively increase earnings in an economy that desperately requires them to, is something worth talking about. Meanwhile, as we wait for the economy to stabilize, next time you’re ordering food delivery from a Skip the Dishes driver, don’t skip the tip. 

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