The Economics of Delivering Pizzas
July 26th, 2008 by Ana
Earlier this summer, I did a cost analysis of delivering pizzas as my part-time job. This week, it’s time to re-evaluate the situation, as the pay has changed and I am not sure it’s for the better.
The big thing that changed was federal minimum wage went up this week to $6.55 per hour. That’s a jump of 70 cents from $5.85 per hour, and I knew my boss was dreading it.
He warned us a few weeks ago that when minimum wage went up, he would have to lower the per-delivery gas offset pay … but I didn’t realize he would lower it this much. We have gone down from $1.28 per delivery order to only 75 cents per delivery order!
We have an employee meeting this morning, and at least one other driver intends to mention to the boss man that this is not enough to keep our vehicles on the road. In fact, this other driver told me last night he will be putting in applications to other jobs. My comment was I am surprised it took him this long (this is the one who drives a truck for delivery).
As for myself, I will let the boss man know I will continue to work (for now) but I only want to pull three long shifts, with a minimum of 7 hours per shift. The store is eight miles from my house, and I drive an average of 100 miles per shift. Working only three days will bring back down to only one tankful of gas per week while still pulling the same amount of hours.
I have to wonder if this kind of thing is happening at other stores. I’m also wondering if the gas prices may be the end of pizza delivery as we know it, especially with tips continuing to dwindle.
This should be an interesting employee meeting.
Posted in pizza delivery |
July 26th, 2008 at 11:08 am
Not that it effects you, but because of your blog earlier this summer I have started tipping my pizza driver 4 or 5 dollars every time to help with gas. Good luck making it.
July 26th, 2008 at 3:26 pm
It is an interesting economic situation. It sure seems like the decrease more than offsets the minimum wage increase (unless there is just 1 trip an hour - ok just a fraction over 1). I can’t see pizza delivery going away - if need be the price will increase - which may reduce demand but it will not eliminate it.
July 28th, 2008 at 3:31 pm
I have to agree with John. What SHOULD happen, theoretically, is that the price of pizza should go up a little bit, the drivers should get a slightly lower stipend, and the pizza place’s margins should go down a little bit. Ultimately, the burden probably will get shared by at least two parties. But even if the consumer had to bear the entire weight of the increase, there would still be a market for delivered pizza even if the price level rises by $.75 per delivery (or whatever the increase per delivery would be). Sorry to hear that your boss is throwing the burden on you, though. Hopefully they’ll have a hard time finding drivers and throw you some more cash again.
August 1st, 2008 at 7:37 pm
[…] The Economics of Delivering Pizzas […]
August 6th, 2008 at 12:10 am
Raising Minimum wage is the stupidest thing the Government could have done regarding wages. Why is it so hard to understand that when you force someone to pay a certain amount you are causing the employer to have to make cuts somewhere. “Well why should people have to work for little to nothing?” First of all minimum wage isn’t supposed to be a “living” wage. It is supposed to be for starting in the job force, then you should constantly continue to build skills and earn pay raises. Secondly, no one is forced to work for anything. The bottom line is if you do not like the wage then you can find another higher paying job. Let the market regulate wage not congress! Just another way to keep poor people poor. Creating incentive shouldn’t be such a hard thing to understand. Why create incentive to stay at the lowest paying job by raising the minimum wage to be closer to a living wage?
August 22nd, 2008 at 5:44 pm
One just needs to ask themselves why Google doesn’t pay minimum wage…. let alone outsource all of their work? Because they want the best of the best and they get the best of the best workers because they pay a lot, and offer great perks.
That’s why minimum wage jobs have the highest turnaround.
I agree with Brad that minimum wage hurts people more than it does helps. If the number of jobs are cut across all minimum wage industries, then it’s harder for people to find a job. So yes, the minimum wage is to stop abuse by employers… but why not prosecute the abuse, and let the market dictate what people should earn.
October 8th, 2008 at 3:21 am
“I agree with Brad that minimum wage hurts people more than it does helps. If the number of jobs are cut across all minimum wage industries, then it’s harder for people to find a job. So yes, the minimum wage is to stop abuse by employers… but why not prosecute the abuse, and let the market dictate what people should earn.”
i also agreed
November 3rd, 2008 at 8:44 am
The pay raise actually have not done the employees much good, as the employer has always managed to cut costs somewhere else. The government should pay a look into these fields too. Also, under present economic situations, the employers do deserve some protection too.
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