Minneapolis Pay Ordinance Poses Threat of Uber and Lyft Departure
The future of ride-sharing companies Uber and Lyft in Minneapolis hangs in the balance as the City Council’s resolution to mandate a higher pay rate for drivers has prompted the companies to threaten discontinuing their services in the metropolitan area. The ordinance, which requires ride-sharing companies to compensate drivers at a rate of $1.40 per mile and $0.51 per minute, or $5 per ride, has sparked concerns about the potential departure of Uber and Lyft from the city.
The Minneapolis City Council passed the ordinance despite a mayoral veto, arguing that it would ensure that drivers are compensated at least $15.57 per hour, which is the city’s minimum wage. Council Member Jamal Osman, who co-authored the ordinance, emphasized the importance of treating drivers as workers deserving of dignified wages. Osman stated, “The Minneapolis City Council will not allow the East African community, or any community, to be exploited for cheap labor.”
However, a study commissioned by the Minnesota Department of Labor and Industry suggested that the $15.57 per hour target could be met with a reduced rate of $0.89 per mile and $0.49 per minute. Uber and Lyft have expressed their support for this study’s proposed rate but have made it clear that they would exit the market if the Minneapolis ordinance is implemented.
The potential departure of Uber and Lyft has raised concerns among Minnesota residents, including Democratic Governor Tim Walz. A significant number of East African immigrants operate as Lyft and Uber drivers in the Minneapolis area and have been vocal in supporting the updated pay. Governor Walz emphasized that the departure of these ride-sharing companies would affect everyone who relies on their services, including students, individuals with disabilities, and those seeking safe transportation while intoxicated.
The state legislature may intervene in this situation, as legislation enacted by state legislators could potentially take precedence over the local ordinance. Governor Walz suggested that the best course of action would be for the Minneapolis City Council to negotiate a compromise with Uber and Lyft.
If Uber and Lyft were to leave the Minneapolis metropolitan area, it would have far-reaching implications for its over 3 million residents. Uber has indicated that it intends to cease operations in Minneapolis, St. Paul, and the Twin Cities metropolitan area, including Minneapolis-Saint Paul International Airport. On the other hand, Lyft has stated that it will only cease operations within Minneapolis, while still providing airport services but discontinuing passenger pickup and drop-off in the city.
This is not the first time that Uber and Lyft have threatened to withdraw from a city due to regulatory measures. In 2016, both companies pulled out of Austin, Texas, when the city implemented fingerprint-based background checks on drivers for passenger safety. However, they eventually returned after the Texas Legislature overturned the local measure.
It remains to be seen what will happen with the Minneapolis pay ordinance and the future of Uber and Lyft in the city. The departure of these ride-sharing companies would undoubtedly have a significant impact on transportation options for Minneapolis residents and visitors alike. Negotiations between the Minneapolis City Council, Uber, and Lyft will be crucial in determining whether a compromise can be reached to ensure fair compensation for drivers while maintaining the availability of these popular ride-hailing services.
