Minneapolis’ Minimum Wage Ordinance Forces Lyft and Uber to Halt Operations
Minneapolis city council overrode the mayor’s veto on a minimum wage bill for rideshare drivers, leading to Lyft and Uber’s decision to cease their services in the city starting May 1. The ordinance mandates rideshare drivers earn a minimum wage of $15.57 hourly, but both companies argue that the bill is deeply flawed and will result in unsustainable operations.
The city council vote on Thursday was 10-3, allowing rideshare drivers to receive the local minimum wage. However, Lyft and Uber contend that this ordinance is problematic. In a statement, a Lyft spokesperson said, “We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders.” Uber echoed similar sentiments, expressing disappointment with the council’s decision and warning of 10,000 workers losing their jobs.
Democratic Mayor Jacob Frey supported the idea of a minimum wage for rideshare drivers but opposed the ordinance due to its disregard for a Minnesota state study that analyzed optimal driver pay rates. Frey believes the current policy would have massive repercussions, including higher prices for riders and potential job losses.
The ordinance mandates a minimum of $1.40 per mile and $0.51 per minute within Minneapolis, but the referenced study showed lower numbers needed to reach minimum wage ($0.89 per mile and $0.49 per minute). Frey believes that policymakers should utilize accurate data when creating legislation, stating, “We shouldn’t be ignoring studies that come out; we should be utilizing them and creating the best possible policy.”
Frey is urging local politicians to find a resolution before May 1. Both Lyft and Uber have announced that user prices would double if they continued operating within the city.
The minimum wage debate in Minneapolis comes as gig workers across the country advocate for fair wages and benefits. Various cities and states have attempted to pass legislation, but opposition has been fierce due to concerns over affordability and the growth of freelance work through apps like Uber and Grubhub.
Last year, Minnesota Governor Tim Walz also vetoed a bill that would have mandated a minimum wage for rideshare drivers, citing potential financial consequences. In contrast to Minneapolis’ decision, California passed Proposition 22 in 2020, allowing Uber and Lyft to treat drivers as independent contractors rather than employees. However, the law includes a minimum earnings guarantee (excluding waiting time).
In June 2020, New York City announced a new minimum pay rate for food app delivery workers, but Uber and other delivery apps sued the city, maintaining that this law would negatively impact drivers more than help them.
As cities continue to navigate the minimum wage issue for gig workers, debates regarding affordability, worker benefits, and accurate data will undoubtedly persist.
