Uber and Lyft threaten to leave Twin Cities over pay hike requirements

MINNEAPOLIS, Minn. (CN) —Rideshare giants Uber and Lyft have threatened to stop doing business in Minnesota’s two largest cities and the surrounding suburbs on May 1 in response to a Thursday vote by the Minneapolis City Council over minimum pay rates for drivers.

The council overrode Mayor Jacob Frey’s veto of the pay raise with a 10-3 vote Thursday, heeding the calls of a group of rideshare drivers who accused big rideshare apps like Uber and Lyft of using their monopoly power to pay unlivable wages — incurring the wrath of Uber and Lyft themselves.

The ordinance, which would go into effect May 1, requires ride-hailing companies like Uber and Lyft to pay their drivers $1.40 per mile and 51 cents per minute for all portions of a ride within Minneapolis, or $5, whichever is higher. That amount, supporters argue, allows drivers to make Minneapolis’ $15.57 minimum wage after accounting for gas, wear and tear and other expenses.

“This is a David and Goliath story,” council member Robin Wonsley, who co-authored the policy, said. “Regular working-class people took on two corporate giants and their political allies, and won.... I’m so proud to have worked with these drivers every step of the way to make today’s victory a reality.”

“They were able to capture our entire city and every single driver,” Council President Elliott Payne said of Uber and Lyft’s dominance of the local ride-hailing market to local news outlet Sahan Journal. “Today we said we’re gonna put our drivers first.”

Uber — which began sabre-rattling about leaving the Twin Cities market when the pay raise ordinance was first proposed, last year, thought it was vetoed by Frey — bemoaned being “kicked out” of the area.  

“We are disappointed the council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded,” the company said in a statement.

Lyft echoed the sentiment in a similar statement.

"This deeply-flawed bill has been jammed through despite major concerns being raised by the community. We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders,” the company said. “This ordinance makes our operations unsustainable.”

Lyft added that it would “continue to advocate for a statewide solution in Minnesota that balances the needs of riders and drivers,” and that it hoped “to return to Minneapolis as soon as possible.”

The data Uber claimed the council ignored likely included a recent state-commissioned study, released shortly after the council’s first vote on the wage ordinance. The study suggested that drivers could earn the equivalent of Minneapolis’ $15.57 hourly minimum wage with a minimum compensation of $1.21 per mile and 49 cents per minute—higher than Frey’s proposed rate of $1.20 per mile and 35 cents per minute, but well below the council’s $1.40 per mile and 51 cents per minute rate.

Uber and Lyft had both previously objected to that study — with Uber describing it as “deeply flawed,” and Lyft as “dishonest, counterproductive and a disservice to the goal of meaningful policymaking” — but Uber pointed to its findings as evidence that the council’s proposal was excessive.

But Minneapolis City Council may not get to have the last word, as state lawmakers have also been discussing their own bills which could preempt Minneapolis’ ordinance.

Democrats — who currently hold all three branches of the state government — are contemplating a bill which would adopt statewide minimums targeted toward better serving rural Minnesota, while suburban Republican representatives have publicly discussed plans to introduce a bill preempting local governments from passing rideshare pay ordinances at all.

Efforts to stop the council’s bill may have an ally in Democratic governor Tim Walz, who told Axios before the override vote that “the city council is certainly making me rethink my thoughts on preemption” and that he was hopeful that Frey’s veto would stand. Walz himself has vetoed past legislation which would have increased rideshare driver wages.

Should the companies follow through on their threats, they may not be missed — smaller competitors have said they’re waiting in the wings to fill the gap left by the companies.

D.C. and Texas-based competitors Empower and Wridz, each of which requires drivers to pay a monthly fee to use the platform and allows the drivers to keep their fares, have said Minneapolis is on their lists for expansion. Local startup Pikkapp has also said they’ve had “preliminary conversations” with city officials about getting licensed to do business in Minneapolis.

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