Uber and Lyft Drivers get a Raise in Minneapolis

Minneapolis Just Passed a $15 Minimum Wage for Uber and Lyft Drivers – But Will the Companies Stick Around?

In a bold move that’s sure to reverberate through the gig economy workforce, the Minneapolis City Council voted 9-4 on Thursday to require ride-hailing giants Uber and Lyft to pay their drivers a minimum wage equivalent of $15.57 an hour.

The ordinance, which is set to take effect on May 1st, lays out a specific pay formula for drivers operating within the city limits: At least $1.40 per mile and $0.51 per minute when transporting passengers. In other words, every ride would have to net the driver a minimum of $5, whichever is higher.

It’s a major victory for Minneapolis’ army of ride-share drivers who have been waging an intense two-year campaign demanding a living wage and better working conditions. Many of these drivers are immigrants from Africa.

“We have been waiting for this for a long time. Almost two years,” an elated Ahmed Ahmed, flanked by dozens of fellow drivers, told reporters outside City Hall after witnessing the historic vote.

But the battle is far from over. Mayor Jacob Frey is vowing to veto the ordinance, aligning himself with Uber and Lyft’s vehement opposition to the plan.

Both companies have issued ominous warnings that they will be forced to shut down operations in Minneapolis entirely if the pay requirements go into effect. Their argument? The city has a much higher proportion of low-income riders compared to places like New York City that have implemented similar regulations. Keeping service viable with significantly higher driver costs could prove impossible, they claim.

“It doesn’t do any good to get a pay raise if you no longer have a job,” a defiant Mayor Frey stated at a press conference on Wednesday, urging the Council to at least delay their vote until reviewing an upcoming state report examining 2022 ridership data across Minnesota.

If Frey does veto as promised, it would take a two-thirds super majority (9 votes) from the City Council to override his veto. Thursday’s 9-4 tally suggests they may have the numbers.

In statements to the press, Uber and Lyft doubled down on their threats to halt service in Minneapolis starting May 1st if the new rules hold:

“We support a minimum earnings standard for drivers, but it must be done in a way that allows the service to sustainably and affordably operate for riders,” Lyft spokesperson CJ Macklin said.

Uber took a more hardliner stance, not even responding to requests for comment from major publications covering the vote.

The companies’ brinkmanship is being questioned by progressive council members who approved the ordinance. As Council Member Jamal Osman bluntly put it: “The fear of these companies leaving does not make it OK to rely on people of color and immigrants for cheap labor.”

It’s true that Uber and Lyft previously issued similar doomsday warnings in New York City and Seattle when those cities passed comparable pay requirements for ride-app drivers. Yet they ultimately remained operational after implementing temporary price increases, suggesting the threats could be an empty gambit.

Some more moderate voices on the Council expressed concerns about knock-on effects across Minnesota if Uber and Lyft do make good on pulling out of Minneapolis. Many rides span between the city and surrounding suburbs and areas.

“Minneapolis is not an island,” cautioned Council Member Michael Rainville, one of the four opposing the pay rules. “Ride-hailing customers often travel between Minneapolis and other parts of the state.”

The bitter policy fight in Minneapolis is unfolding as worker movements seeking better pay and benefits are gaining steam nationwide in the gig economy’s snapshot delivery and transportation sectors.

Just last year, gig workers for apps like DoorDash, GrubHub and Amazon Flex in Massachusetts were granted access to benefits like minimum wage, overtime and earned sick time under a groundbreaking state law.

The bold moves by Minneapolis leaders indicate a willingness to be at the vanguard of establishing portable worker protections and wages to match the 21st century’s rapidly-changing digital workforce. Seattle, New York City and a few other municipalities have already started down this path with their ride-hail pay standards.

However, the blowback and threats from Uber and Lyft to abandon a major metropolitan market like Minneapolis altogether shows just how fiercely the companies are digging in against any government intervention into their business models. Their future ability to classify drivers as independent contractors hangs in the balance of these battles.

With partisan gridlock in Washington D.C. leaving federal action on gig worker rights stalled for now, it’s increasingly falling on local governments to hammer out these disruptive policies piecemeal. The Minneapolis City Council’s bold vote indicates the willingness of some leaders to be first-movers on this front despite the risks and pressures.

Whether Uber and Lyft make good on their doomsday warnings of a Minneapolis shutdown – and how surrounding suburbs and cities react – will undoubtedly be one of the biggest developments to watch in the gig economy labor movement in 2024.

And this saga is just getting started. The high stakes Minnesota battle is likely providing a window into similar fights to come across other states and cities in the years ahead.


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