Uber and Lyft threaten to leave Minneapolis if mayor signs minimum wage bill for drivers
Uber and Lyft threatened to halt operations in Minneapolis if the mayor doesn’t veto a new rule proposed Thursday that sets a minimum wage for rideshare drivers.
In a 7-5 vote, the Minneapolis City Council passed an ordinance that amends its regulations for ridesharing employees, including establishing a minimum wage that says drivers should be paid at least $1.40 per miles and $0.51 per minute.
“Minimum compensation is due only for the portion of the ride that occurs within the city,” Minneapolis government officials wrote in the ordinance, which is set to take effect on Jan. 1, 2024.
However, Uber and Lyft are banking on the fact that Minneapolis Mayor Jacob Frey will veto the new rule.
Frey has until Aug. 23 to stop the mandates from taking effect come 2024. If he doesn’t intervene, the world’s two biggest ridesharing companies have said that they’ll take their business elsewhere.
“Should this proposal become law, Lyft will be forced to cease operations in the City of Minneapolis on its effective date of January 1, 2024,” the company, known for its eye-catching pink logo, wrote to the city’s council on Tuesday, according to a letter obtained by The Post.
The company said that it “would not be able to avoid such price increases when a regulation would nearly double our operating expenses.”
Lyft spokesperson CJ Macklin added that a bill of this kind would hurt drivers financially rather than bolster their earnings “because prices could double and only the most wealthy could still afford a ride.”
“A trip today that would cost $20 could cost $40 next year,” Lyft warned in its letter, noting that decreased demand for its services would impact drivers’ earnings.
“In the last quarter, drivers on the Lyft platform in Minneapolis were warning on average $37+ per utilized hour including tips and bonuses. But this proposal would deplete ride demand by close to two-thirds, meaning even under the higher per-mile and per-minute compensation rates set by the bill, drivers would earn significantly less overall,” the memo added.
“This bill has been jammed through the Council in less than a month with little consideration for its consequences,” company spokesperson Macklin said.
“That’s why we urge Mayor Frey to veto this bill and instead allow time for the state’s rideshare task force to complete its research. Overwise, operating within Minneapolis would no longer be sustainable, and we would need to shut down within the city when the law takes effect on Jan. 1.”
Uber also reportedly warned its drivers in the area of the impending new rule in an email on Monday, urging them to contact Mayor Frey and the City Council to ask them to oppose the ordinance.
In its email, obtained by CNN Business, Uber said the legislation could “greatly limit” its ability to remove unsafe drivers from the platform and increase the cost of rides.
“If this bill were to pass, we would unfortunately have no choice but to greatly reduce service, and possibly shut down operations entirely,” Uber wrote.
In a statement shared with The Post, an Uber spokesperson said that thee company is “is disappointed by the results of yesterday’s vote and the overall process in Minneapolis,” noting that Uber “never said definitively we would leave Minneapolis.”
Public comments were included in the ordinance’s “supporting documents,” and they show that rideshare customers in the Land of 10,000 Lakes aren’t thrilled about the new mandate, either.
“I use Uber and Lyft frequently and talk to the drivers all the time. Of course they would like to be
paid more. We all would. But there are more drivers than their are riders is what I hear. Making
rides more expensive will decrease ridership and put many drivers out of work,” a man by the name of Mac Case penned in an email to a Minneapolis councilperson.
The Minneapolis Regional Chamber, a nonprofit group advocating for the city’s economy, also collectively wrote a letter to the city over its “deep concerns with the proposed ordinance,” which included worries that “the price of rideshare services would increase as a result of this ordinance, running the risk of pricing out the folks who rely on those services the most.”
The organization pointed to common use-cases for apps like Uber and Lyft, such as many city residents needing a ride to work outside of the Twin Cities’ public transportation service, Metro Transit’s, operating hours, “particularly those in the hospitality industry.”
“Additionally, we would note that Metro Transit’s Guaranteed Ride Home program, a program designed to ensure commuters have access to transportation in the event of an emergency, relies on rideshare services when other modes are unavailable,” the letter added, which was signed by Minneapolis Regional Chamber’s president and CEO.
Frey, meanwhile, has expressed reservations about the move, indicating that he could move forward with the veto.
“This ordinance stands to significantly impact our city in terms of worker protections, public safety, disability rights and transportation mode shift goals,” he wrote to City Council on Wednesday, according to the email, which was obtained by The Post.
Mayor Frey’s spokesperson Ally Peters said in a statement to The Post: “As the mayor laid out in his letter to the City Council yesterday, he supports drivers being paid more. However, he has deep concerns with how the ordinance is written and the impact it will have. He needs time to review the ordinance and the amendments made to it.”
