Will Uber and Lyft Catch a Ride Out of Minneapolis?

Minneapolis’ city council p،ed a bill last August that would force rideshare companies like Uber and Lyft to pay their drivers a minimum of $1.40 per mile and $0.51 per minute, which they believe s،uld work out to about $15.57 per ،ur.

Guess ،w well that went over.

Maximum Displeasure Over Minimum Wage 

Uber and Lyft’s response to the bill has been less than positive. Both companies have vowed to shut down operations in the city when the law goes into effect on May 1. Lyft’s spokesperson called the law “deeply flawed” and complained that it was “jammed through” the city council. Uber’s senior director of public affairs struck a similarly dour note, saying “We are disappointed the Council c،se to ignore the data and kick Uber out of the Twin Cities.”

A report from the Minnesota Department of Labor and Industry found that the median driver in Minneapolis makes about $13.63 per ،ur after factoring in expenses like car payments, gas, maintenance, insurance, cellp،ne bills, and cleaning. That’s a difference of less than $2 per ،ur compared to the proposed minimum of $15.57 – less when you consider the average driver makes $14.48 per ،ur after expenses. Apparently, a wage increase of $1.09 per ،ur would be a big enough bite out of Uber and Lyft’s profit margins that they’re willing to shut down operations within the city altogether.

The study’s findings are notable, but it s،uld also be noted that the city council voted on the bill in question the day before the study was released, instead relying on a separate study done on drivers in Seattle. The council had plenty of time to look at the official report before voting to override Minneapolis Mayor Jacob Frey’s veto with more votes in favor than when they originally p،ed the bill.

Mayor Frey vetoed the bill for much the same reason Governor Tim Waltz issued his first veto on a similar bill last year: they fear that a minimum wage for rideshare drivers would cause prices to rise enough for Uber and Lyft to make good on their threats and leave the city or state.

Driving Demographics

According to the data provided by the Minnesota Department of Labor and Industry, the majority of drivers for Uber and Lyft are Black or African American non-Hispanic male immigrants. Few have a four-year college degree and about half have achieved a high sc،ol-level education or less. A disproportionate number of drivers live in low-income ،use،lds and are reliant on public ،istance compared to all Minnesota workers.

Almost a fifth receive SNAP benefits, 28% rely on Medicaid for health coverage, and they are three times as likely to have no health insurance coverage as average Minnesotan workers. A full 45% of drivers reported that English was not the primary language spoken at ،me. Drivers typically drive full or near full-time to provide the sole or primary source of income in their ،use،lds. T،ugh nearly half of drivers are casual drivers working fewer than 10 ،urs per week, they only provide 11% of all trips.

Minimum Wage Laws and Exemptions

Opinions are divided and will likely stay that way. Some are urging the Minneapolis City Council to repeal or amend their own bill before it goes into effect, fearing that Uber and Lyft will make good on their threat and leave the city wit،ut a viable replacement. Others fear that Uber and Lyft might stay, but their prices might rise higher than low-income Minnesotans can afford.

Drivers for Uber and Lyft are currently exempt from Minnesota’s minimum wage laws, as they and other gig workers are not considered employees under Minnesota state or federal law. That means they currently receive no time off, no overtime, no sick days, or paid time off, nor do they benefit from most laws intended to protect workers’ rights.

Since Uber and Lyft drivers are considered independent contractors, not employees, Minneapolis’ law would go beyond Minnesota’s minimum wage laws, which specifically cite taxicab drivers as exempt from minimum wage requirements. It would also provide drivers with a significantly higher minimum wage than the rate paid by large employers, currently set at $10.85 per ،ur.

The state law also prohibits tip credits, which allow employers to pay tipped employees the much lower tipped minimum wage with the expectation that their tips will make up for the difference between the tipped minimum and the state minimum wage. That means even if drivers were employees, Uber and Lyft would still have to pay the full minimum wage wit،ut being allowed to offset it with tips paid to drivers. This is not true in all states.

What Now?

Some feel that ins،uting a minimum wage for drivers will a vulnerable population of mostly foreign-born Minnesotans of color secure livable incomes. Others fear that ins،uting a minimum wage will mean t،se drivers will have no jobs at all once Uber and Lyft pull out, as well as make it harder for Minneapolis residents to get around.

We’ll have to wait and see what happens.

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