Market Protection or Disruption? The Impact of a Minimum Rate in the Platform Economy

13 May 2026

Recently, I have been giving a lot of thought to the question of what constitutes a fair minimum rate for self-employed workers in general and for those in the platform economy in particular. I looked at the Living Tariff and, in my discussions with Human Rights Watch and the Dutch Association of Journalists (NVJ), explored how such a rate might be introduced. One question that remained unanswered was: what is the actual effect of such a tariff on the market? How does the dynamic between the platform, clients and workers change if the government intervenes with a minimum rate?

Unintended effects of a minimum rate in the platform economy

Fortunately, I wasn’t the only one wondering about this. Researchers from Delft University of Technology and Jagiellonian University (Poland) investigated the matter. Farnoud Ghasemi, Arjan de Ruijter, Rafal Kucharski and Oded Cats recently (March 2026) published their findings in the report Regulating ride-sourcing markets: Can minimum wage regulation protect drivers without disrupting the market?

Their main question: can you protect self-employed taxi drivers without disrupting the market? The researchers used computer simulations to model the behaviour of taxi drivers and customers on platforms such as Uber and Lyft. This allows them to predict how they will react to new policies (a so-called ‘agent-based model’).

In The Gig Work Podcast by the WageIndicator Foundation, I spoke to researcher Farnoud Ghasemi about the findings and the unintended consequences that a seemingly simple measure can have.

Digital testing ground for taxi apps

Ghasemi is a postdoctoral researcher in the field of transport and mobility modelling at Delft University of Technology. He has been researching platforms such as taxi apps like Uber, Lyft and Didi for years. During his PhD, he developed a kind of digital testing ground: an advanced simulation model of a city with thousands of virtual taxi drivers and passengers. This allows him to test how they would react to new regulations, such as a minimum rate.

More freedom, fewer rights and security

According to Ghasemi, platforms have radically transformed the taxi market. They have made booking taxi rides smoother and more efficient. “They have also changed the driver’s position,” says the researcher.

“Traditionally, the supply has been centralised: drivers are tied to a taxi company and cannot simply refuse fares or set their own working hours. Platforms are changing that. They offer drivers, as self-employed workers, greater flexibility and freedom of choice. But that freedom also has a downside: drivers often have no employment rights or insurance.”

Ghasemi spoke to drivers in all sorts of cities. “I often hear the same story: they’ve been lured by platforms with the promise of freedom and income, but in practice the earnings are disappointing,” he says. “Sometimes taxi drivers even earn well below the minimum wage. Some simply have no other choice.”

This was a familiar story to me. I have also spoken to drivers worldwide, and they told me that they cannot easily walk away afterwards because they have invested heavily in a car. They often simply cannot afford to stop, no matter how poor the tariffs and conditions are.

The effects of a minimum rate in the platform economy

In various countries, courts have ruled that platforms must employ drivers. In practice, this achieves little, says the researcher. In the Netherlands, for example, the cleaning platform Helpling was required to employ its workers, but this meant it was no longer competitive. Helpling had to shut down, and so the workers ultimately gained nothing from this.

Another solution involves minimum conditions for platform workers, such as minimum rates. This can be seen, for example, with delivery drivers in New York and the Transport Workers Union in Australia. What effect does this have? Once a minimum rate applies, the costs and risks associated with waiting times are borne by the platform. The company will therefore grant access to fewer drivers, in order to reduce the risk of those waiting costs.

Protection without disruption

Ghasemi and his colleagues investigated the effects of such an intervention and under what conditions a minimum wage can protect taxi drivers without disrupting the market.

“It’s a complex question, because there are many competing interests that often don’t align,” he explains. “Passengers want cheap journeys with short waiting times. Drivers want a decent income. The platform wants to make a profit whilst keeping both passengers and drivers happy. Finally, there are policymakers and legislators with their own vision and agenda.”

It is complicated to take measures that improve the situation for one party, he explains. “You don’t know exactly in advance who else will be affected, how, and what the impact will be. A 20% commission increase does not have exactly a 20% impact on the rest. That is why you have to look at the whole system rather than just one part.”

Digital testing ground encourages behaviour among all parties

Research is difficult because platforms share little data on rates, the number of journeys and how the algorithms work. In his digital testing ground, Ghasemi was able to partially circumvent those limitations. He identified the stakeholders (driver, platform, passenger, policymaker) and modelled their specific behaviour.

Ghasemi: “For drivers, we looked at participation decision: based on my past experiences, do I work today or not? For passengers, we look at whether they use a taxi app or, for example, public transport. And for platforms, we model their strategy: the commission and the prices. We bring this all together and that’s how we discover patterns."

In the digital testing ground, they can even see what happens when the different apps compete with each other. “If one platform lowers its price and attracts all the drivers, the other platform has to respond. We’ve now added that kind of complexity.”

Minimum pay for platform workers: lower, average or higher?

The researchers used the simulation to test what happens when a minimum rate is introduced. They tested three scenarios: a minimum rate lower than the minimum wage, a rate equal to the minimum wage, and a higher rate.

A tariff equal to the minimum wage proved to work best. ‘We see that platforms then often opt for a lower tariff per journey. That is positive for both passengers and drivers: although the tariff per journey is lower, the platform tops up the pay to the minimum wage.’

A too high tariff has negative consequences for everyone

A minimum rate that is too high has the opposite effect: the number of journeys falls, and that is at the expense of the platform’s profitability. “What companies then do is restrict access to a select group of drivers based on algorithms,” explains the researcher. “They retain only the number of drivers they need to meet the expected demand.”

This has significant consequences. “For the individual driver who suddenly can no longer log in, it’s terrible; they lose their job and income from one day to the next,” he explains. “The drivers who are allowed to stay do have a more stable income, but fewer people have access to work.”

The key to success: maintain the balance

Measures and policy rules are often ineffective because they only benefit one or a few stakeholders. “You only succeed if you keep the system in balance,” says Ghasemi. “If the driver’s pay rises but a journey becomes too expensive for the passenger, the number of journeys drops. Ultimately, drivers therefore earn less and will leave the platform.”

The insights of Ghasemi and his colleagues apply not only to taxi apps, but to all platforms that bring supply and demand together. “The key lesson is: don’t just change the regulations, but take into account the complexity of the system. A measure intended for one party has a direct effect on the rest of the stakeholders. As a result, a measure can have exactly the opposite effect to what you wanted to achieve."

Ultimately, it all comes down to political choices, the researcher concludes. “Do we want a large number of people to be able to earn a little extra with an uncertain income? Or do we want fewer people to have access to work, but for those who do work to have a stable, decent income?

Conclusion: a necessary political choice

The research shows how regulation upsets the delicate balance in the platform economy. Although a minimum rate protects individual drivers from underpayment, it can lead to higher prices for customers, financial problems for platforms and, ultimately, less work. Policymakers must therefore be cautious, as an overly strict minimum rate can disrupt the market.

An additional complexity is competition from the non-platform economy. The researchers did not include this in their study, but it does have a significant impact. There are still many taxi drivers and food delivery workers who do not work via platforms. If a minimum rate is only introduced for platforms, they will suddenly have a significant competitive disadvantage. Thus, such a measure could lead to less work via platforms and consequently fewer workers falling under the conditions.

Finally, it is important not only to introduce minimum conditions, but also to enforce them. If companies realise they can get around the regulations, this creates an unfair competitive advantage. I have seen this happen frequently in food delivery. Whilst one platform adheres strictly to the regulations and employs staff, another keeps costs low by continuing to work with self-employed workers.

Transparency of platforms

Ghasemi and his team have done a fantastic job building a simulation. We can predict effects even more accurately with insight into data and algorithms. This is where the platforms have a role to play. It is astonishing how complex and opaque the models of taxi apps such as Lyft and Uber have become. It is almost impossible for a driver, customer or outsider to gain any insight.

Furthermore, platforms operate with opaque, dynamic tariffs. It is unclear what margins they include. Moreover, the algorithm determines tariffs that vary by driver, so it can happen that two taxi drivers receive different payments for exactly the same journey. This is unfair, which is why there is growing resistance to this system.

This ties in with what I discussed earlier with the Worker Info Exchange: knowledge is power. If the platform holds all the data, it can make workers believe whatever it wants. But as Ghasemi’s pilot project shows: policy without a strategy to maintain balance may have a negative effect on everyone. Including the platform. My plea is therefore: make the system less complex and provide workers, researchers and policymakers with relevant insights and mechanisms to influence these decision-making processes.

Political choices

As Ghasemi says: ultimately, politicians must make a choice. It is now clear that there is a problem in the platform economy. Politicians can no longer ignore this. If we enforce a minimum rate, platforms will allow fewer workers to keep costs down. That means some self-employed people will lose their (part-time) jobs. But the big question is: how much of a problem do we think that is? What kind of work do we actually want to allow? Isn’t it more important that those who work receive a fair, Living Wage? That is a political choice.