15 facts about Uber and Lyft and the effort to pay drivers a minimum wage

In the past couple weeks, we’ve had a flurry of news about Uber and Lyft driver pay — a new ordinance, veto and veto override, two studies, a bill at the Legislature — and a fog of war has enveloped the debate.

Here’s 15 facts that seem significant: 

1. Minnesota has more than 10,000 app-based drivers

One-third of the drivers provide more than two-thirds of the trips, according to a state report that examined driver pay for the more than 18 million rides in the state in 2022. The researchers also surveyed more than 1,800 drivers.  

Here’s a description of the driver pool, from the first line of the state report: “The majority of Minnesota [transportation network company] drivers are male immigrants and predominantly Black or African American non-Hispanic workers with less than a four-year college degree; many live in low-income households (up to 200% of the federal poverty level) and, relative to all Minnesota workers, are disproportionately reliant on public assistance.” 

Drivers are about three times as likely as all Minnesota workers to rely on Medical Assistance (the state’s version of Medicaid) for health coverage (28% compared to 9%); or to have no health insurance (14% to 5%). 

2. Uber and Lyft drivers earned an average of $30.27 per hour

That includes all time spent waiting for a ride, driving to pick someone up and then driving them to a destination. (Median pay — meaning half make more, and half make less — was $29.64) This creates an assumption that if a driver could keep expenses a little less than $15 per hour, they would make Minneapolis minimum wage of $15.57 per hour. 

The two economists who wrote the state report determined that expenses were slightly higher than that. Here are their assumptions: Workers drive 35,000 miles, and expenses — including costs like $10,044 per year to purchase their cars, plus gas, registration, insurance and $1,440 for their cell phones etc. — total out to about 64 cents per mile, or about $22,400. Greater Minnesota drivers earn less and have to drive more to get to their rides, but only accounted for 5% of the total Minnesota trips. 

3. The state report was written by two labor-friendly economists

James Parrott of The New School and Michael Reich of the University of California, Berkeley. They wrote a commentary for the Daily News endorsing New York City’s driver pay ordinance, which delivered some of the highest minimum pay rates in the country. This should give us some confidence that their study isn’t some corporate hack job; indeed the companies attacked the report’s authors upon its release. 

Their study said drivers would earn the city of Minneapolis’ minimum wage of $15.57 an hour after they paid their expenses and payroll taxes if they earned 49 cents per minute and 89 cents per mile transporting riders. 

With those minimum pay rates, drivers would see their hourly earnings rise by about 10%. (Which means the Minneapolis ordinance — $1.40 per mile and 51 cents per minute — would raise driver pay well above minimum wage.) 

Parrott and Reich also calculated a higher per mile rate of $1.20 in the metro to cover both bare minimum costs of working on the platforms and also the costs of benefits afforded many regular employees like sick leave, paid family leave, health insurance, retirement savings and unemployment insurance. (Uber and Lyft drivers are treated as independent contractors and therefore not afforded these benefits.) 

Doing so would give drivers a 29% raise in the metro, and minimum rates would still be well below what the Minneapolis City Council passed. 

4. The Minneapolis City Council approved the ordinance before they saw the state report

The Minneapolis ordinance that sets driver pay at $1.40 per mile and 51 cents per minute for regular fares was passed the day before the massive study on driver pay was released by the state Department of Labor and Industry. The council was aware the state report was going to be released the following day, but took action anyway. 

Consider a scenario in which Republican lawmakers passed a big tax cut on the day before the release of a report on the state’s finances. We’d all be screaming bloody murder. 

5. The city report the council relied on was based on far less data from somewhere else

The rates passed by City Council were informed by a report from city staff that warned readers that it lacked “direct unrestricted access to rideshare data” in Minneapolis. The city report leans on an analysis of Seattle, where rates are $1.55 per mile and 66 cents per minute, and $1.31 per mile and 38 cents per minute outside the city. Funny thing about that Seattle report the city relied on: It was written by Parrott and Reich, the very same authors of the state report! I asked the authors about this, and Reich responded by email: 

7. Uber and Lyft drivers do get some tax advantages

If you use your car to earn income and aren’t reimbursed by your company — as is the case with Uber and Lyft — you can write off 67 cents for every mile you drive on your taxes. So, for instance, if you drive 35,000 miles in a year for Uber or Lyft, you reduce your taxable income by $23,450. 

8. The Minneapolis minimum rates are higher than the minimum wage

If the state report is accurate, then Minneapolis has created a special class of workers who are entitled to pay above minimum wage given the fare structure of $1.40 per mile and 51 cents per minute for regular fares. This same minimum wage is not guaranteed to, say, fast food or retail workers, or other gig workers like at Care.com or Uber Eats for instance. 

9. No one knows for sure if the companies are bluffing about leaving

Some progressive lawmakers have predicted that the companies are bluffing about leaving. It wouldn’t be the first time corporations bluffed in response to legislation they don’t like. 

Uber and Lyft are both in Washington state and New York state, which enacted minimum driver pay ordinances. But in both cases, the states agreed to compromise rates with the companies. 

Lyft insists it’s leaving Minneapolis, while Uber says it’s leaving the entire Twin Cities metro. The companies left Austin, Texas, after the city council there passed an ordinance requiring drivers to be fingerprinted. The companies returned after the Texas Legislature preempted the ordinance and said the ride companies fall under state instead of local jurisdiction, and today, drivers there don’t need to be fingerprinted. 

Uber and Lyft have backed down from threats in at least one case in the United States. In Phoenix, the companies threatened to end service to the airport over higher fees but continued service after the fees were enacted.

10. A lot of people use Uber and Lyft.

As previously noted, the state report’s analysis relied on more than 18 million rides in a single year. 

11. Airport rides will be a special challenge should Uber and Lyft leave.

There were 2.8 million Uber and Lyft trips to and from MSP Airport in 2023, according to the Metropolitan Airports Commission. Nearly 13% of Uber and Lyft rides in 2022 were airport trips.  

Losing this mode of transport entirely would substantially increase Blue Line light rail traffic to Minneapolis and the #54 bus to St. Paul. 

12. The taxi industry barely exists anymore

Minneapolis currently has only 39 licensed cab drivers, Axios reported recently. Even when the Twin Cities had a viable taxi industry, people complained about it. Twin Cities Business editor Adam Platt recently described the setup: You couldn’t hail a cab on the street; you had to find a cab stand or call a cab, wherein you’d wait 15 minutes or maybe hours for them to come and get you. 

13. Other companies will struggle to scale up if Uber and Lyft leave

Other ride-hailing companies told Axios they’d make the Twin Cities a priority if Uber and Lyft leave, but it’s unclear they could scale up quickly. Transit agencies have been offering microtransit services that mimic Uber and Lyft for a few years, as Jiahong Pan reported for the Reformer recently, but there’s no way they could keep up with demand if Uber and Lyft were to depart the Twin Cities. 

14. Some lawmakers think the state should create a competitor app

State Sen. Omar Fateh, DFL-Minneapolis, was the lead author of a bill that passed last year, including rates of a $5 minimum fee plus $1.45 per mile and 34 cents per minute in the seven-county metro. Uber claimed at the time that these rates would require ride prices to increase 50%. The bill was vetoed by Gov. Tim Walz, who instead formed a task force to commission the report and work out a compromise. Fateh withdrew from the task force, and has said he’s been mulling a public version of Uber and Lyft, perhaps indicating that he has no interest in a compromise this year. 

He recently unveiled a bill with $1.39 per mile and 49 cents per minute rates, well above the $1.20 recommended by the state report to pay Minneapolis minimum wage plus expenses and benefits. He got that figure by applying the estimate for greater Minnesota, where drivers spend less time with passengers in their cars, to the entire state. 

15. Democrats are leery of overriding Minneapolis

Walz said Monday he’s cool to the idea of preempting Minneapolis’ ordinance. The argument against preemption relies on the idea that local people should determine business and labor conditions in their community. 

The principle is apparently less important in another sphere, however: The DFL-controlled Legislature is ignoring the argument for local control as it seeks to pass a bill overriding local zoning laws to make way for more housing.