The news: New York City Mayor Zohran Mamdani endorsed the Delivery Protection Act, a City Council bill that would require Amazon, FedEx, and other last-mile delivery operators to obtain city licenses and hire thousands of currently subcontracted couriers as direct employees, per The Wall Street Journal.

Zooming out: The bill takes aim at the contractor-based model that’s central to the last-mile delivery strategies of Amazon and other businesses in dense urban markets.

• FedEx contracts with businesses that buy their own trucks and hire their own drivers to cover geographic routes, while Amazon’s contractors lease vehicles but similarly hire and manage their own drivers.
• Amazon said it would consider relocating its warehouses outside New York City if the bill passes, warning the measure could put more than 5,000 delivery workers, who earn an average of almost $24 an hour, at risk.

Why it matters: Because New York would be the first city to require last-mile operators to make delivery workers direct employees, the measure could serve as a blueprint for other governments seeking to reshape contractor-based labor models.

Several other governments are pushing in a similar direction:

• New Jersey sued Amazon last week, alleging the company used its dominance over its delivery network to suppress wages and working conditions while blocking organizing efforts.
• In 2019, California passed a law that would have reclassified Uber and Lyft drivers as employees, prompting the platforms to spend millions on a referendum that successfully preserved the contractor model, with some concessions on pay and conditions.

Implications for retailers and logistics providers: Amazon’s ability to promise fast, low-cost delivery in New York rests in part on its Flex gig-driver program, which lets it scale capacity without the fixed costs of direct employment. A licensing mandate that forces direct hiring could increase labor costs and limit some of the scheduling flexibility that helps make rapid delivery economical in the city.

Amazon’s stated workaround of relocating warehouses outside city limits could work in the short term, though potentially at the expense of delivery speed. That tradeoff matters because 23% of consumers worldwide cite speed as the most important aspect of the online delivery experience, second only to cost at 36%, per Metapack and Retail Economics. But relocating becomes less viable as a workaround if the policy spreads.

If it does, the bill could change the economics of last-mile delivery well beyond New York, forcing retailers to decide whether to absorb higher fulfillment costs, pass them on to consumers, or rethink the speed and price of delivery altogether.