Affordability Roundtable (Part 2): The Hidden Costs of College and Food Delivery: How Regulations Drive Up Prices

Summary

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City Journal Audio — Affordability Roundtable (Part 2): The Hidden Costs of College and Food Delivery: How Regulations Drive Up Prices

Date: April 9, 2026
Host: Rafael Mangual
Guests: Neetu Arnold (Policy Analyst, Education) & Jarrett Dieterle (Legal Policy Fellow)

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Episode Overview

This roundtable dives into the affordability crisis facing urban Americans, focusing on two areas where hidden and rising costs are squeezing household budgets: higher education (specifically student loan debt) and food delivery services. The discussion explores how regulatory frameworks and public policy contribute to escalating prices, often with unintended consequences for the very groups they aim to help. Host Rafael Mangual is joined by Neetu Arnold and Jarrett Dieterle, whose recent City Journal pieces offer insight and policy suggestions for making college and basic city conveniences more affordable.

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Key Discussion Points & Insights

1. The Real Cost of College and Student Debt

Speaker: Neetu Arnold
Timestamps: [01:27] – [03:58], [11:33], [13:41] – [15:44], [16:30], [18:57] – [20:22], [30:07] – [39:00]

• Tuition Has Outpaced Inflation:
  • College costs have more than doubled in real terms since 1985, far outstripping inflation.
  • “The average cost of college has more than doubled since 1985, and that's inflation adjusted.” — Neetu [01:50]
• Generational Divide in Perceptions:
  • Today’s students and younger grads face much higher bills than previous generations, often dismissed by older people as spendthrift or over-indulgent.
  • “Someone not eating avocado toast is not going to solve that problem.” — Neetu [03:51]
• Federal Subsidies Fuel Cost Increases:
  • The Federal student loan system enables price hikes because universities know students can borrow to pay, undercutting market pressure to keep costs down.
  • “For every dollar received by a college in federal student loans, they increase the price by 60 cents.” — Neetu [12:55]
• Over-saturation and Misaligned Incentives:
  • More Americans are pushed toward college, often without being academically prepared, leading to higher dropout rates and wasted debt.
  • Attendance at college is often treated as a social and economic necessity, with little attention to alternative pathways.
  • “We need multiple pathways to success, whether that's the trades, whether that's finishing high school and then going straight into the workforce.” — Neetu [13:41]
• Credential Inflation:
  • Jobs increasingly require college degrees, even when not necessary, due in part to employers' legal risk aversion (citing Griggs v. Duke Power Co. [19:20]).
  • “It’s created this system where if you want to do something other than going to college, it’s now just become much harder.” — Neetu [20:13]
• Guardrails as a Solution:
  • Advocates for smarter loan allocation mechanisms—like using academic readiness and program ROI to limit student loan disbursement.
  • “I think we need guardrails on how loans are distributed. We could consider academic preparation. We could consider the program that they're entering.” — Neetu [30:10]

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2. Food Delivery: Regulation and Rising Costs

Speaker: Jarrett Dieterle
Timestamps: [05:27] – [10:24], [21:43], [25:41], [27:10], [39:00] – [42:21]

• How Regulations Drive Up Costs:
  • Recent progressive policies (reclassifying gig workers as employees, city-mandated minimum wages) have increased delivery labor costs.
  • “We’ve seen a lot... to apply things like minimum wage to these workers...and as anyone that’s taken Economics 101 understands, if you increase the labor costs that you’re therefore going to...increase the output cost and the ultimate cost to the consumers.” — Jarrett [06:03]
• Counterproductive Outcomes for Workers:
  • Increase in formal wages has been offset by declines in tips and lower demand for services, sometimes reducing actual take-home pay.
  • “When you...raise the minimum wage on tipped employees, you’re going to see about a 1 to 1 decrease in the amount of tips that they're getting.” — Jarrett [09:18]
  • Waitlists for new drivers grew, locking out workers: “After they applied their minimum wage to rideshare drivers, there was like a 27,000...wait list to become a Uber Eats or DoorDash driver in New York City.” — Jarrett [08:37]
• Impact on Consumers:
  • Delivery costs rose about 10% in New York City after policy changes. Seattle saw similar increases, with “regulatory response fees” of $5–$6 per order.
  • “The majority of that order was actually coming from the delivery cost, the tip, the service fees.” — Rafael [26:25]
• Reduced Affordability and Suppressed Demand:
  • Fees now sometimes make up a third or more of a total food delivery bill, leading more people to forgo delivery or tip less, further squeezing workers.
• Beyond Stereotypes:
  • Regulatory changes hurt not just affluent urbanites but low-income residents who depend on food or grocery delivery for practical reasons.
  • “There are non-entitled, non-rich people that are ordering grocery delivery for their staples, and that comes at a cost.” — Jarrett [28:08]
• Possible Solutions:
  • Instead of shoehorning gig work into 20th-century union/employee models, he suggests “portable benefits” accounts that provide flexible security for gig workers without destroying the flexibility that makes gig work attractive.
  • “There are ideas that are being pursued actively in red and blue states. But unfortunately, we have not been seeing that in the deepest blue large progressive cities where they tend to...try to basically import 20th-century labor ideas.” — Jarrett [41:17]

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Notable Quotes

• College Affordability

  • “The presence of federal subsidies is allowing universities to simply increase the price of college because they know that students...can simply turn to the federal student loan system.” — Neetu [12:27]
  • “For some people, college can be a great investment... However, at the same time, the way we disperse student loans, we don't consider whether a student is prepared to go to college, or whether they're entering a program where they could reasonably recoup the costs.” — Neetu [30:45]
  • “We've lost $200 billion by giving out federal student loans... That is from the Government Accountability Report.” — Neetu [31:57]

• Food Delivery & Regulation

  • “When Seattle passed their minimum wage, there were...incredible stories of people ordering $32 sandwiches, and at least like 30% of that could just be fees and taxes.” — Jarrett [27:10]
  • “We live in a 21st-century economy, not a 20th-century economy. And instead we're still trying to shoehorn these...outdated models into a modern workforce that is not one size fits all.” — Jarrett [41:52]

• On Labor Market Dynamism

  • “If you look at what workers care about most right now, it's actually flexibility and autonomy and schedule, more even than salary and benefits.” — Jarrett [22:01]
  • “Not every one wants to be one-sized and go on one track into one career and work a nine-to-five job at one office.” — Jarrett [39:50]

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Memorable Moments

• [14:41]: Rafael invokes a comedian’s story about spending a year in community college only taking remedial courses, illustrating the real cost of sending unprepared students to college.
• [26:25]: Rafael recounts paying more for Uber Eats delivery fees than for his family’s McDonald’s meal, driving home the real-world impact of the regulatory fees.
• [31:57]: Neetu debunks the myth that the government profits from student loans, revealing a $200 billion loss over 20 years.
• [21:43]: Discussion of how many ride-share and gig workers are college graduates or even people pursuing higher degrees, complicating the policy debate on wages and status.

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Important Timestamps

• [01:27] – Neetu discusses the roots of the student debt/college affordability crisis.
• [05:27] – Jarrett introduces the regulatory drivers behind expensive food delivery.
• [11:33] – The parallel between subsidies in higher ed and destabilized markets in both cases.
• [13:41] – The problem with only recognizing college as the path to prosperity.
• [18:57] – Credential inflation and why employers rely on degrees.
• [25:41] – Real-world examples of increased delivery costs.
• [30:07] – Proposals for smarter student loan disbursement and the need for guardrails.
• [39:00] – Policy solutions: prioritizing labor market flexibility and portable benefits.

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Solutions & Recommendations

For College Affordability:

• Implement guardrails on student loan distribution, considering academic readiness and likely return on investment from chosen fields.
• Encourage multiple pathways to career readiness (trades, alternative credentials) outside of the college pipeline.
• Renew focus on high school-level vocational programs and skills tracks.

For Food Delivery and Labor Markets:

• Rethink city and state regulations that force gig work into traditional employment models if they raise consumer costs and reduce worker opportunity.
• Experiment with “portable benefits” accounts to bridge the benefits gap for flexible, gig-based workers.
• Prioritize flexibility and autonomy in labor markets rather than imposing rigid, top-down requirements.

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This episode offers a well-reasoned critique of widely adopted urban policies around college, student debt, and food delivery. Both contributors argue for nuanced, evidence-based—rather than ideological—solutions to the affordability crunch hitting urban Americans.

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Transcript

[A]

Hello and welcome to another virtual episode of the City Journal podcast. My name is Rafael Mangual. I am your host and I am joined today by two of my brilliant Manhattan Institute colleagues. Neetu Arnold, who's a pulse and policy analyst here at the Manhattan Institute focusing on education, and Jarrett Dieterle, a legal policy fellow here at the Manhattan Institute who does kind of a little bit of everything. Jared, I feel like you're sort of a bit of a renaissance man on the legal team, contributing to amicus briefs, doing regulatory notes, but also just, you know, contributing to our anti regulation agenda here. So the reason we've got you both on, as you know, we've been doing a couple of episodes on City Journal's affordability agenda package, and I thought you guys had some really interesting pieces that I wanted to talk about. And so that's what we're going to talk about today. So, Neetu, I want to start with you because your piece hits on something that has become a big chunk of a lot of individuals budgets, particularly in large American cities, and that is student loan payments. And you know, the more people I have met in the professional classes, it seems like all of them have that one thing in common, which is that massive monthly bill in excess of $1,000 where they are paying off their college debt. And it just seems like, well, hey, you know, if affordability is an issue, maybe not everyone actually needs to go down this route. And I thought your piece made an excellent argument, so why don't you take us through it a little bit?

[B]

Thank you. I mean, for a lot of people, higher education is the first time that they really run into affordability issues, whether they take on student loan debt or they don't, they just see the high price tag. And I, I think you bring up a good point that this is an important issue to talk about because I think oftentimes it's easy to look at other issues. You know, health care, groceries, and those are all important. But higher education is something that is affecting a lot of younger people. And I think it's very easy for them to feel like their interests are not being paid attention to. That's what my piece does. I argue that addressing affordability on higher education is both a policy issue, but also messaging. I think something that a lot of younger people hear. They'll talk about how expensive college has become. And that's not just something that they're observing. I mean, we see it in the data has outpaced revenue or has actually outpaced inflation. When you look at the average cost of college, it has more than doubled since 1985, and that's inflation adjusted. So this is not just something that

[A]

young people gotten twice as better, right?

[B]

I mean, no, no, it's the same. It's. It's pretty much the same. And so it's not just something that young people are imagining college has gotten more expensive. But oftentimes when they're talking about these issues, they might hear from older people who went during a time when it was much cheaper that they should just not spend so much money on their $20 avocado toasts. And I think for a lot of younger people, they feel like their. Their concerns are being dismissed. And, you know, this is a distinction that I make in the piece that when it comes to student debt, that is an individual's responsibility. If somebody is saying, I have so much student debt to pay off and I don't know where to start, I need to streamline some. Some part of my spending. You know, maybe telling someone they shouldn't spend $20 on avocado toast might make sense, but when we're talking about the actual increase in price of college, someone not eating avocado toast is not going to solve that problem.

[A]

Yeah, no. 100%. Although avocado seems like a very good segue into what Jared's piece touches on, which is, you know, another part, this affordability crisis that seems to be hitting young people in particular. There was a recent New York Times piece that was sort of profiling the expenses of people who by all accounts, are in the upper echelons of the socioeconomic totem pole. And yet a big chunk of their regular monthly spending is actually going to food delivery costs. So these are uber eats, grocery deliveries like Instacart, and these kinds of services. More and more young, More and more young people that I know, especially since the pandemic, seem to have gotten accustomed to this idea that, you know, they don't have to cook their own meals, they don't have to prepare their own food, that they can just have these, you know, their cravings delivered to them almost in an instant. And I think, Nita, you hit on something which is that it's hard for people to feel sympathy for someone on those grounds. But Jared's piece actually, you know, makes, I think, some really good points, that these. These tools, these services which do provide real value for people, do not have to be anywhere near as expensive as they've become in big American cities, especially like New York. And that seems to be a regulation story. Do I have that right, Jared?

[C]

Yeah, that would be my argument. And I think the data has borne that out. You know, we've seen a lot, I guess, just to back up. So people were talking about the same thing, people that deliver, whether It's Uber Eats, DoorDash, any of the brands you've heard, they tend to operate as independent contractors with the platforms that they work with. And there's been an effort really going on close to a decade now, a renewed effort to argue, particularly the push by the progressive left to argue that maybe they should be full scale employees instead of contractors.

[A]

Why does that matter for them? Like what's the, what's, what's, what's the meaningful distinction there?

[C]

Well, the argument again by the progressives is that by making them full scale employees, they will then have access to the kind of workplace benefits that employees are accustomed to. So things like health insurance, workers comp, different things and we can unpack that more. But basically short of a full scale reclassification, there's also been an effort to apply things like the minimum wage to these workers. Obviously that's a little bit tricky since their compensation comes through delivery. But there's some complex calculations that are used to essentially ensure that they hit an hourly rate, often above $20. An at least in big cities, the New Yorks, the Seattle's of the world. And as we learn, anyone that's taken Economics 101 class understands that if you increase the labor costs that you're therefore going to have that passed along to consumers and increased cost of food. And that's exactly what's happening. So New York City has kind of been at the vanguard of this movement to apply minimum wage to these contractors. And lo and behold, that has led to a spike in food delivery costs. They saw a 10% increase in food delivery costs after their minimum wage effects took, took effect in 2003, 2023. And so we're seeing it in the food we eat in our wallets. What is the reality of basic economics, which is when you increase the labor costs, you're going to increase the output cost and the ultimate cost of the consumers.

[A]

Yeah, you know, it seems like one of the sort of recurring themes in progressive policy proposals is that the group that those proposals are intended to benefit end up suffering in some way as a result of those proposals being enacted. And it seems like this is one of those cases because your piece does a really great job of pointing out that, okay, even in the places that have adopted some of these, you know, higher minimum wages, for example, the workers haven't clearly come out on top here. Right. People are tipping less where the food delivery services have become more expensive. Right. Tell us a little bit about that. I mean, do I have that right or is this really a boon for the workers?

[C]

Yeah, I think that's a really important point because I think a lot of progressives would argue that hey, even if the consumers are paying more, we're helping the workers. Right. And that is a much more complex picture. Again, we've learned with the minimum wage that on paper, the people that will keep their jobs in the face of minimum wage will show higher earnings. On paper. But what always happens is people get crowded out of the market. And that's what happens in New York City. So after they applied their minimum wage to rideshare drivers, there was like a 27,000 waitlet person wait list to become a Uber Eats or doordash driver in New York city. That was UberEats specifically. And so that just shows that people are being locked out and their wage goes to zero. Right. In the meantime. And so I think that we, we lose sight of that. Also there's been direct evidence, and the Census Bureau has a good report on this, that anytime you raise the minimum wage on tipped employees, you're going to see about a 1 to 1 decrease in the amount of tips that they're getting. And so the overall tipped rates in New York city drops like 47% after the minimum wage went through. And so whenever they've done economic analysis, Seattle passed a version of the minimum wage, they've shown no overall increase in driver take home pay as a result of these minimum wages, which is the entire, entire point of why we're doing it in the first place. And one last thing I'm going to add that I think really often gets missed on this whole thing is that we live in a new normal of no taxes on tips now. And we can debate whether that is a good policy or a bad policy. And I've done that before, but that is the reality we live in. And so when you have that substitution effect where you're decreasing tips and increasing traditional wage, you're effectively substituting tax free income for taxed income. And so I think that that's often missed in this a lot too. And so the result is that people in some circumstances can actually bring home less money even in the face of a minimum wage.

[A]

Yeah, I mean, that's a really interesting and complex problem that you articulated I think very well in your piece. Need to, I want to get back to the college cost thing. Right. I'm Hearing Jarrett talk. And there's a very clear sort of supply demand issue afoot there. And it seems like that's kind of the case in the colle space too, right. You look at higher education costs ballooning. I mean, it's. It's not hard to understand it when you realize that, like, I mean, compared to 50 years ago, right. The share of Americans going to college has grown massively. Right. Like, we've made it more accessible, we've made it more affordable by, you know, basically making it impossible not to qualify for a student loan, which of course, you know, discouraged any effort on the part of these colleges and universities to control their own costs and keep those costs down. And so, you know, the demand has kind of been artificially inflated or boosted. And so, you know, there's no shortage of supply. Right. So it's just the prices go up and up and up, and there's no real sort of consumer counter to that.

[B]

Right. And I think part of the reason is because of the presence of federal subsidies, especially the federal student loan system. There are a lot of explanations out there for why the price of college has increased. Some people will say it's because state governments aren't investing enough in colleges and universities. When I looked at 26 public universities in my own research, I found that that story doesn't hold up for the most part. In fact, when. When I looked at that data, tuition revenue increased three times that of. Yeah, three times. Yeah. So that. That of state disinvestment. So it means that there's something more going on. And I. I'm more of the belief that it's the Bennett hypothesis, which is the idea that the presence of federal subsidies is allowing universities to simply increase the price of college because they know that students, borrowers can simply turn to the federal student loan system. And there's some evidence for this that I point, point out in the City Journal piece. A Federal reserve study from 2017 found that for every dollar received by a college in federal student loans, they increase the price by 60 cents.

[A]

Yeah, I mean, that makes perfect sense. Right? I mean, it's like if you don't have to make your product affordable to your consumer base.

[C]

Right.

[A]

You lose all inc. To do that. Right. There's no risk of you losing customers because those customers can't afford it. And that, you know, it seems to describe perfectly what's happening in the college and university space. I think one question a lot of people have though is like, why. Why do this? Why expand subsidies to so many people? And it sounds like the answer has at least in part to do with the fact that, like, we have just adopted this idea that if you don't go to college in the United States of America, you're some kind of failure. That this is part of it, Part

[B]

of it is that you're some kind of failure. And part of it is because we have systems set up where if you don't go to college, you're simply not going to do well financially. That, I think, is the crux of the issue. And I think the solution here is that college, we need multiple pathways to success, whether that's the trades, whether that's simply finishing high school and then going straight into the workforce. I think something that's under discussed in the issue right now with college affordability is that so many students are going to college when they're simply not prepared and that's going to have some adverse financial outcomes. You're more likely to drop out of school or you're going to enter remedial courses which do not count towards graduation requirements. So you have to pay for those remedial courses. And that's another barrier to graduation.

[C]

Yeah.

[A]

There's a comedian, Nate Bargazzi, who, who I like, and he has this bit about having gone to community college for a year and not having any credits because he, he was only taking remedial courses, you know, but. But that's not free.

[B]

That's a real problem. That's. That's a real problem. And I think it's controversial to talk about unprepared students going to college. I. A lot of universities will try to paint it as you're just putting these students down, you don't care about their success. And I don't see it that way at all. I think they should be getting a good K through 12 education, making sure that they are getting foundational knowledge in reading, in math and history and science. But if they are simply not meeting the expectations required in college, I don't think it makes sense to A, push them into higher education and then B, expect them to pay those costs. And I think that's where some of the artificial demand for college comes from.

[A]

Yeah, you know, I mean, when we're having this conversation, I'm just like listening, you know, to my parents growing up and, you know, to so many of the people who talk about this issue where they will point to data that seem pretty convincing that say, like, hey, if you have a college degree, your earning potential is, you know, X times higher than that. If you don't have a college degree, you know, your ability to provide for your family or retire securely or you know, cover healthcare emergencies, et cetera. And they tie this to the college degree and it's like it makes it seem as though college is a prerequisite to that kind of financial health. But how much of this is a function of the fact that we have kind of created an economy around this that doesn't value non college educated workers enough?

[B]

No, I think that's a great point you bring up. And I would also add that the return on investment of a college degree also depends on what you're studying. The field of study, psychology, super saturated. The market's not looking good there if you're a psychology graduate. Meanwhile, STEM fields wide open. We need more people in stem. So it really depends on what your major is, also what your plans are. Do you have a concrete plan? I've talked to students or I should say I should talk to people who did not go to college. That was something they knew right from the beginning they did not want to go through. They had a very clear plan of how they were going to achieve what they wanted to achieve and they did. So I knew someone who worked in prison security. I interviewed him for research that I did. And again that's not something that's meant for everyone. You know, I'm five three, I don't think I would be great at prison security. I don't think you'd want me as a prison security guard. But this person I interviewed did and I think he was, he knew what he wanted, he got it and he, he's doing pretty well for himself. So I think it really depends on, I know in the system we have right now, if you're going to go down the non college route, you really have to have, you really have to know what your plans are and how you're going to achieve those goals.

[A]

Yeah, I think that's right. But I wonder if that's something that should change, right? I mean like I know a lot of people who didn't go to college and some of the trades and they do incredibly well. Really well actually. I mean I know someone who just bought a second house who, you know, who never went to college, just, you know, I think he's an iron worker or something like that. So, so there's clearly a path there. But I think something that a lot of people have noticed is that in the workforce college has become a requirement for a lot of jobs that don't really require a higher education. You know what I mean? You see college requirements attached to Jobs like to be an assistant manager at a Foot Locker or something like that. And it's like, well, maybe there's something to this idea that we have artificially imposed these requirements and that has propped up this kind of feedback loop where people feel like they need to go and spend this money in order to be successful, but maybe they don't.

[B]

No, I agree with you. I would want to see that system changed. A lot of employers rely on the college degree because they're no longer allowed to. Well, I should say they're heavily discouraged from having their own employment test. That's due to Griggs versus Duke Power Company. It was.

[A]

So tell us about that case. I know what it is, but I think Jared does either.

[B]

It was. It was a Supreme Court ruling. I believe it was in the 60s or 70s, and it essentially discouraged employers from. From. From giving their own employment test because they had racially disparate outcomes. So for a lot of. For a lot of employers, if they don't want a lawsuit, they simply turned to college degrees as the proxy for skills, for knowledge to do the jobs appropriately. Now, I think there's something to be said that at the time that this ruling came out, you know, we want to make sure that applicants who are applying to jobs are not being discriminated against based on their race. But I think what Griggs did was that it created incentives for employers to simply rely on the college degree almost blindly. And it's created this system where if you want to do something other than going to college, it's now just become much harder.

[A]

No, I think that makes a lot of sense. I mean, just thinking that not only does it make it a lot harder for people to afford college, but once they've gone to college and spent that money, I think it also makes it a lot harder for them to experience success in the job market because we've watered down the value of the credential. If everyone is getting a college degree, well, then, you know, it's not like the 1970s, where a bachelor's sort of really distinguishes you from the rest of the field. Now everyone and their mother has a bachelor's degree. You've got to invest even more to differentiate yourself. And so what ends up happening is a lot of these people are graduating with an enormous amount of debt, and they end up driving for Uber, driving for. For Lyft, you know, doing Uber Eats or Instacart. And it's, you know, again, not that there's anything wrong with that line of work, but it's Certainly not what I think a lot of people had mind for their post graduation careers having achieved that kind of credential. And you know, Jared, I mean, I wanted to get your take on this. I mean, is part of this push, this like unionization push, this push to increase the wage just a function of the fact that you have a lot of people who are working in this space who feel entitled to the level of income that, you know, they associated with the, the credential that they spent a lot of money to get that.

[C]

I think that it certainly could be going on. Yes, I think that, you know, you're right. People can often have frustration about, you know, what their employment path has unfolded. I think the interesting thing to, to understand about gig work too is that if you really look at actually this is across the board in the American economy, if you look at what workers care about most right now, it's actually flexibility and autonomy and schedule more even than salary and benefits. And that's not just a millennial thing necessarily or a, you know, people that have gone to college thing. You see that actually in surveys of shift in hourly workers too, interestingly. And I think that, that, you know, yes, there may be some of what you just said. I think another component of it also is that a lot of the folks that like to work in gig type roles like to do so because it is the most flexible work. You can log in and work whenever you want. The single parent that is ra freezing two teenagers can, you know, log in for a couple hours on the weekend to make some cash in a way that you can't do with other jobs. And so I think one of the wonderful things about the American economy at its best is that we can have very diversified, different versions of employment essentially for people. And that the traditional 9 to 5 job, you know, go to college and work in an office. Nine to five isn't for everyone. And that's actually a strength that doesn't necessarily have to be a weakness. Instead, the left has been kind of trying to one size our economy into one particular type of thing. And actually when we just hearing this discussion talking about different, you know, industries and routes to employment, fascinatingly, the restaurant industry is one of the great examples of an industry and workforce where it's around 80% of the people that work in it have below a bachelor's or associate's degree. And so I think you'd probably find perhaps similar in the case of gig work. And we should want those, those, those sectors to be strong, not just because we want cheap food all of us love cheap food. Hooray. But also because we want to actually help the people that are in that for whatever reason it may be, whether it's temporarily and they're frustrated and want to get out of it or if it actually fits their life, that.

[A]

Yeah, no, I think that's exactly right. I mean, I was just in St. Louis for a speaking engagement at Washington University, and the driver who took me to the airport was telling me he's a master's. He's an MBA student getting an MBA with a specific focus in healthcare administration. He wants to be a hospital administrator. And he says he drives Uber Black, and usually only Uber black. And he can make, you know, up to $90 an hour on some days. And he's like, so if I work for 10 hours, can make $900 in a single day, which is great, because I can turn this on when I'm not in school, when I don't have too much work to do, and I can make enough money to pay my rent, which is not all that expensive outside of St. Louis. And he's like, it really has made it complete. This is the thing that has made it possible for me to pay my rent and absorb a lot of the costs associated with getting an mba. And, you know, yeah, that. That seems, like, incredibly attractive to me. And so, you know, the. I want to just kind of make this more concrete, though, right? Because it's like your piece does a great job of talking about, you know, these regulations that have made these. These services more expensive to consume. But I think a lot of people read stuff like that and they think, well, how much more expensive could it be? Right? Like. Like, you know, so talk to us a little bit about the more concrete figures. Right? Like, what does this look like? How does this actually hit, you know, the pocketbook of the average American?

[C]

Yeah, it's a good question. And, you know, I mentioned earlier, there was New York saw about a 10% spike in its food delivery costs after its minimum wage application. There's more even kind of absurd stories than that, I guess, if you're looking for the right word of it. Seattle also has pushed a minimum wage. And, you know, once that happens again, you know, that that needs to come from somewhere. And a lot of the companies, the gig companies, have instituted what they call regulatory response fees. It's happened in New York as well, where they're adding another, you know, five to six dollars. Basically, that is a fee to cover the increased labor costs that they have.

[A]

So I find it incredible. I mean, there are times where I'll order Uber E Meats. Right. The other day I ordered McDonald's for our family. The kids wanted Happy Meals, right? So we got a couple of Happy Meals. I got a Big Mac, a chicken sandwich. My wife got a, you know, double cheeseburger or something like that, some fries, a couple of drinks. And the delivery and service fees and taxes, I think, were a third higher than what the total cost of the actual food order was. So the majority of that order was actually coming from the delivery cost, the tip, the service fees. And it's, you know, I found myself thinking like, well, why don't I just drive over and get it myself and, you know, and save, what, 30 bucks or something like that?

[C]

Yeah, no, yeah. When Seattle passed their minimum wage, there was these, you know, incredible stories of, you know, people ordering like 26 coffees, you know, or like $32 sandwiches. And, you know, at least like 30% of that could just be fees and taxes, for example. And so the reality is that people order less when that happens, which again means that the drivers or the deliverers in this case have less opportunity to deliver and drive, which ends up meaning less, less money in their pockets as well. But yeah, I think it, and you know, we. Food is something that people notice most intensely in their day to day. What impacts them most most is a increase in the cost of eggs, whether it's for grocery or whether it's restaurant delivery. And I think, you know, it's easy too. We were talking earlier kind of about the caricature of perhaps the millennial city dweller that's just kind of ordering all their food out. But you know, these, these also, this minimum wage, New York just extended theirs to grocery delivery as well from like the instant carts of the world. And you know, I, I've been fortunate to only live in the greater New York area for one internship back at Manhattan Institute back in the day. But it's, it's not easy to live in a city like New York and go to the grocery store and haul all your groceries home. I mean, there are non entitled, non rich people that are ordering grocery delivery for their staples, and that comes at a cost when they're paying, you know, an extra 5, 10, you know, $15 on top of their grocery order and then do that every single week. And so, you know, we, we have Zohar and Mamdani has been talking about trying to make Halal like $8 again. Like he has recognized that food matters. His ways of trying to solve that are the opposite of what I still

[A]

11 in the city, by the way.

[C]

Exactly. Yeah, exactly. Yeah.

[A]

I have. I have recent experience with this.

[C]

Yes, yes, no, 100%. But I think that the diagnosis is correct. The prescription is not, but food matters, and it impacts people's pocketbooks directly.

[A]

You know, I'm listening to both you and Nitu talk about your pieces, and what's striking to me is that, Jarrett, you are describing an increase in costs. Right. And a decrease in affordability of something because demand for it has been sapped by making it more expensive. And yet, Neetu, here you are talking about higher education, which has become way more expensive, but demand for it hasn't gone down, I think in part because it's subsidized. Right. It's like, well, if you can't afford it, we'll just help you afford it. And now you can afford it. That seems like a particularly problematic situation where you don't have the sort of traditional supply demand effects where something becomes more expensive and then definitionally more unaffordable.

[B]

Right. And that's why I think a solution that we should be thinking about, a realistic solution, would be adding guardrails to the way student loans are distributed. I think we need to. Yeah, I think we need to remember that for some people, college can be a great investment, and it's an investment even to our society and to our industry. However, at the same time, the way we disperse student loans, we don't consider whether a student is a prepared to go to college, whether they're entering a program where they could reasonably recoup the costs. And I think about this similarly to banks. Banks don't just lend money to people where there's a high risk that they won't return the money. And so I. I think we need guardrails on how loans are distributed. We could consider academic preparation. We could consider the program that they're entering. But the idea is that since this is taxpayer dollars, the taxpayer should see a return on investment.

[A]

So. All right. Well, that's an interesting. So there's two things I want to get at. Right. So one is right. So essentially what you're kind of proposing. Right. Is like instead of a credit score, you have your SAT score here because

[B]

most students don't necessarily have a credit history.

[A]

Right.

[B]

So we're going to look at things like academic performance.

[A]

Right, Right. So it's like, okay, you need a minimum SAT score for us to feel secure enough, you know, to get federal student loans.

[B]

Is this not precluding other kinds of loans?

[A]

Right. But my understanding and correct Me, if I'm wrong, is that the federal government actually sees a positive return. Right. They're. They're making money on student loans.

[B]

No, no, we have lost money from giving out student loans. We've lost $200 billion. That. That is from the Government Accountability Report.

[A]

Tell us what those figures look like. Because I think a lot of people, you know, they see these super high interest rates and think, well, you know, the government's got to be making.

[B]

No, we have high interest rates because the loans are not getting paid back. So it's becoming more risky. So we've lost $200 billion by giving out federal student loans. I believe this is from the Government Accountability Report, and it was over a period of 20 years. So, yeah, that's a huge misconception. I believe under the Trump administration, this is the first time that they were able to at least hit even with getting back student loans. Loans. So the government's not making money off of student loans.

[A]

Wow. Yeah. I think a lot of people don't know that. That's. That's a. That's a really important part of this. Okay, so let's say, you know, they start taking into account academic performance. Are there other factors that will predict a positive return on that kind of investment that we should be looking at?

[B]

Yeah, I mean, we're also looking at the programs that they're entering. One thing I would say is I would want this to be somewhat of a flexible scale, because a program that's a good return on investment today may not be 10 years from now, maybe it's super saturated. So I'd want some flexibility there. I think, when it comes to academic performance, we could look at SATs, we could look at grades, we could look at state exams. It's not necessarily about getting a perfect score, but it's about a. It's a score where we can expect that students are going to perform well, that they're going to stay in college. Because I think a big part that we don't talk about dropout, you know, everyone wants to talk about the financial pressures students face to drop out. And I think that's somewhat of a convenient narrative. It's a little bit. I mean, there may be some truth to that. I'm not saying that that's not the case, but when I read coverage of why students are dropping out, it's often that they find out that they weren't academically prepared, not as much as they thought. And I think that's also an important consideration when we're thinking about dropout. When we're thinking about whether a student should be going to college in the first place.

[A]

Yeah, no, I think that's really helpful and useful framing. I mean, one thing that I'm curious about, too, is just the program that someone's enrolling in. I mean, how much of that really matters outside the STEM fields for job performance? I think about some of the people I know who are very financially successful. They've been very successful in their careers. I look at their undergraduate majors, and very few of them have a direct path from their undergraduate major to what they're doing. So it's like, really, you know, a lot of employers I talk to who are doing a lot of hiring. I mean, for them, it's like, as long as I can tell you're smart, what you actually majored in doesn't matter all that much to me outside of a handful of fields that usually require an advanced degree anyway. Right. So it's like, well, something I've thought

[B]

about is maybe it's a bit flexible. So let's say you have a certain score, you're performing at a certain level, there might be more flexibility just because there's this idea that it doesn't really matter what you major in. There's confidence that you will just do well. But if you're at a certain. If you're in a certain range, there's going to be more requirements. That could be one way to think about it. I'm quite flexible on maybe how we weight academic performance, return on investment in the degree. I wouldn't say that the return on investment should necessarily be at zero, or we don't consider it at all, because there are going to be people who enter programs where just the chances of getting a job there are very low, or they. They enter jobs that are not. Not where they were expecting to be, and they're not even making what they were expecting to make in salaries. So. But I'm flexible on how we weight it. I. My big thing is I think we need guardrails. I think we need to be a lot smarter in how we disperse federal student loans.

[A]

And is there something that we should be doing even before that stage, just in terms of the culture around the idea of college? Right. I mean, you know, my wife is a high school principal at a school that has two tracks. They have. Have, like a college preparatory track, but they also have a career track that, you know, for. For kids who maybe don't want to go to college or for whom college isn't going to be a great fit, they can learn A trade, they can learn a skill set, and they'll graduate high school with a credential that's going to allow them, you know, to. To have some value in the job market even at the young age of 18. I'd like to see more high schools doing that. But. But maybe I'm really wrong.

[B]

No, I think it's great to have multiple. Multiple paths to success, even starting as early as in high school. I know the high school I attended, and I grew up in New York State, so we have boces, and there were. There were multiple tracks. So some students would. This was like around 10th grade, they would attend certain classes in the high school, and then other classes they would go off location and, you know, they could do. They were in the automotive. Automotive, right.

[A]

I also went to high school in New York and we had boces and they hosted. I think it was called the. A school, the alternative school. But it was like. It's like that was almost exclusively for kids who, like, just got out of juvie or.

[B]

Okay. You know, this was not. This was not that kind of program. Some of the students, I'll go there, like, they were great people.

[A]

Yeah.

[B]

But they had interests that didn't necessarily require college education. Hairstylists, estheticians, working on cars. I think that was great to have, and I would like to see more of those types of programs. Something else I talk about in my piece is that, look, there are policies that can change the price of college, but you don't have to go into debt. You don't have to wait for government policies to change before you decide to make college affordable. Attend a state school, maybe go to community college first, then go to state school or go to private school. Look for schools that offer 100% financial aid packages. I think that's. Those are some ways where you can reduce the. The cost of attending a good college.

[A]

No, I couldn't agree more. I mean, Jarrett, talk to me a little bit about the sort of solutions. Right. So I think you've done an incredible job of identifying the problem. Right. We are overburdening this particular sector of the economy with regulations that have only functioned to increase the cost of the services that we're trying to consume and actually made it more difficult for people to get and stay employed and to enjoy an increase in wages as a result of these regulations. I mean, is the solution as simple as just like, getting rid of the regulations? If so, like, which one should we prioritize? Or are there other things that we're not thinking about?

[C]

Yeah, well, it's interesting. I think that first I would actually start where you, you all left off. I mean really, this whole conversation we're having today is about labor markets at the end of the day. Yes, we've talked about the cost to consumers of food, but it's about ultimately creating more dynamic and flexible labor market and recognizing that not every one wants to be one sized and go on one track into one career and work a nine to five job at one office. And so I think that the more we can have a prioritization on flexibility, the better off that we're going to be. And, and Niju just spoke to that a little bit in the college context and I think you see that here in the labor market of restaurants as well. And I think that we, there's different, there's some policies that can help with that too. Right. And I think that one of the examples we've seen, at least in the gig economy context is that again by focusing on what people want, which is flexibility, but also recognizing that there may be a desire to have some more employment benefits in their jobs, is to try to basically create a model that does both things instead of one thing or the other thing. And we've seen that it's called a courtable benefits model. And we don't need to get into all the details, details of that right now. But essentially it allows people that work in gig as independent contractors to have a fund that operates a little bit like a SEP ira. And the gig companies can contribute to it and the workers can contribute to it and it follows them from gig to gig. So it's not tied to one job. Like a full scale employee's retirement plan is usually tied to their employer. And that's really been helpful. They piloted that in states like Pennsylvania, blue states like Maryland, red states like Tennessee and Utah. We've seen that everywhere and it's been something that has helped create more benefit financial security for workers in these industries. But it still allows them to have the flexibility of logging in and out whenever they want to and still doesn't try to one size them into a model that they may not desire. So that's just one example that there are ideas that are being pursued actively in red and blue states. But unfortunately we have not been seeing that in the deepest blue large progressive cities where they tend to instead try to basically import 20th century labor ideas like be a full scale employee or here's the minimum wage applying to you instead. And I think that that's where the real miss is. We live in a 21st century economy, not a 20th century economy. And instead we're still trying to shoehorn these kind of outdated models into a modern workforce that is not one size fits all.

[A]

I think that all makes sense to me. I mean, you know, I really, like I said, I loved your pieces because they both tackle issues that I think are hitting everybody in big, expensive cities and a really concrete way. And you guys have, I think, an array of policy prescriptions that make a lot of sense that are low cost and implement and that would actually make things better. So I appreciate the work that you guys did for this special breakout of last City Journal issue. I hope you'll continue to hit those points in your future pieces. But yeah, I mean, like I said, I wish we could talk for another hour, but we're running up on time. And so I just want to thank you for coming on today and I hope we can have you both on the show again soon. Jared, this is your first time on the show, right?

[C]

It was, yes. It's great to be here.

[A]

Let's, let's make sure it's not the last. All right. Well, until then, you all have been watching or listening to the City Journal podcast. Please do not forget to, like, comment, subscribe, leave us a note, shoot us an email, tell us what you like, tell us what you don't like, and please, if you haven't already, go back, read the last issue of City Journal. There are some incredible pieces in that affordability package, some other really great feature essays on an array of topics. It's by far the single best magazine in America, so make sure you go check it out. And until next week, you have been listening to the City Journal podcast.