Uber and Lyft Threaten To Leave Minnesota in Response to Minneapolis’s New $15 Minimum Wage for Drivers

By: Georgia | Published: Mar 09, 2024

In a significant decision, the Minneapolis City Council voted 9-4 to increase the minimum wage for ride-hail drivers to $15 per hour. 

This move comes amid concerns from Mayor Jacob Frey, who has expressed intentions to veto the law. The new wage plan is set to begin on May 1st, altering the earnings landscape for drivers in the city.

Ride-Sharing Giants Threaten Departure

Uber and Lyft have responded strongly to the wage increase, threatening to exit the Minnesota market should the legislation take effect.

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A charcoal grey Ford sedan parked on a city street, prominently displaying the Uber logo on the driver's side door

Source: Wikimedia Commons

Their departure could dramatically reshape the ride-sharing landscape in the state, affecting both drivers and riders.

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Mayor's Veto Power Versus Council's Decision

Mayor Jacob Frey is considering a veto against the wage increase. 

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A man in a suit and tie stands at a podium with the Minneapolis city logo, delivering a speech. Behind him, partially out of focus, are individuals wearing masks, including a woman standing attentively

Source: Wikimedia Commons

However, the council’s decisive vote in favor could override the mayor’s veto, demonstrating a strong commitment from the council members to implement the wage hike despite potential repercussions from major ride-sharing services.

Detailed Wage Structure for Drivers

Under the new legislation, drivers are set to earn $1.4 per mile and 51 cents per minute, with an enhanced rate of $1.81 per mile for those operating wheelchair-accessible vehicles. 

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Inside the cabin of an Audi, viewed from the rear seat perspective, with a driver at the wheel and a smartphone mounted on the dashboard displaying a GPS navigation app

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This structured approach aims to ensure a fair wage for drivers, considering the various aspects of their service.

Economic Implications for Ride-Sharing Fares

Uber and Lyft have expressed concerns that the increased driver wages will force them to double the fares for riders. 

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A magenta sidewalk sign with the Lyft logo prominently displayed, indicating a designated pick-up and drop-off zone for Lyft ride-sharing services

Source: Wikimedia Commons

This could potentially drive away customers, challenging the business model of the ride-sharing services and impacting their operational viability in Minneapolis.

Previous Attempts at Similar Legislation

This isn’t the first time Minneapolis City Council has attempted to pass a measure to increase wages for ride-hail drivers.

A man dressed in a business suit with a tie, looking off into the distance with a thoughtful expression. He is standing outdoors with a backdrop of blurred greenery

Source: Wikimedia Commons

A similar effort was made last year but was vetoed by Mayor Frey. The recurring attempts reflect the council’s ongoing commitment to addressing driver wages.

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Statewide Efforts and Reactions

Efforts to establish a driver pay plan have been seen at the state level as well, with Governor Tim Walz vetoing a proposal amid opposition from ride-sharing platforms. 

A person's hand holding a smartphone with a black screen displaying the white Uber logo

Source: Austin Distel/Unsplash

The state’s involvement indicates a broader interest and concern regarding the compensation of ride-hail drivers in Minnesota.

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Lyft's Call for Collaboration

Lyft has made a public statement urging Mayor Frey to collaborate on establishing a statewide minimum earnings standard.

View from the back seat of a car, showing a driver in a red shirt with his hand on the steering wheel and a smartphone mounted on the dashboard, displaying a navigation app with a map

Source: Paul Hanaoka/Unsplash

The company emphasizes the need for a balanced approach that considers the needs of all stakeholders in the ride-sharing ecosystem.

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Uber's Statewide Legislation Support

Uber has voiced support for comprehensive statewide legislation that would ensure a minimum earning of $35 per hour for drivers while maintaining their flexibility and independence. 

The facade of a modern building with reflective glass windows and Uber's logo visible

Source: Wikimedia Commons

This stance highlights Uber’s preference for a broader legislative solution over city-specific regulations.

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Drivers' Advocacy and Response to the Legislation

Drivers, particularly those from the African immigrant community, have advocated for increased wages since 2022.

Close-up of a person's hands holding a smartphone with a ride-sharing app open, displaying a map with location pins and the option to choose a ride type. The user's thumb is interacting with the touchscreen

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Their persistence and advocacy played a role in the council’s decision, as expressed by driver Ahmed Ahmed who attended the meeting to witness the vote.

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Council Members Reflect Driver Sentiments

Council members who voted in favor of the wage increase echoed the sentiments of the drivers, emphasizing the importance of fair compensation.

A gray car with an illuminated Uber sign on its roof, captured in a street scene at dusk. The car is part of a line of vehicles in traffic

Source: Viktor Avdeev/Unsplash

Council Member Jason Chavez said “If employers leave because they are paying sub-minimum wages and companies step in who pay minimum wages, I believe that’s a win for our city.”

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The Future of Ride-Sharing in Minneapolis

With the wage increase set to take effect on May 1st, the future of ride-sharing in Minneapolis hangs in the balance.

A collection of toy cars on a white surface, each with miniature signs for Lyft and Uber on their roofs. The focus is on a green toy car in the center, with the Lyft and Uber logos blurred in the background

Source: Thought Catalog/Unsplash

The decision could set a precedent for other cities, reflecting a growing trend toward addressing the economic realities of gig economy workers. The coming months will be crucial in determining the outcome of this legislative effort.

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