Driver pay bill advances as Uber and Lyft pitch much-lower rates

Legislation setting pay rates for Uber and Lyft drivers cleared a House committee on a party-line vote Tuesday, with both companies suggesting much lower rates and saying they will leave Minnesota if they must significantly raise driver pay.

The bill’s fate is uncertain, although it is advancing through committees. Gov. Tim Walz, who vetoed pay rates for drivers last year, has not voiced full support of a pay rate proposed by DFL legislators and Minneapolis City Council leaders as a compromise to stop Uber and Lyft from leaving the Twin Cities while boosting driver pay. During a hearing Tuesday, the companies said the proposed rates are “business-ending” and would not keep them in Minnesota.

“If your business model relies on keeping people in poverty, you do not have a viable business model in Minnesota,” said Rep. Hodan Hassan, DFL-Minneapolis, who is carrying the pay minimum bill in the House.

Uber’s longtime Minnesota lobbyist, Joel Carlson, proposed a rate of 68 cents per mile and 41 cents per minute, just over half the rate DFL leaders endorsed.

Marianna Brown, vice president of the Minnesota Uber/Lyft Drivers Association, was incredulous.

“Sixty-eight cents? What can we do with that?” she exclaimed. “These fares don’t have to be increased. They just have to release some of the money back to the drivers.”

Carlson also suggested Uber could pay drivers a flat $26 per hour rate for the time they spend en route to pick up a passenger and the time a passenger is riding. Stephen Cooper, an attorney representing the drivers’ association, said after expenses and taxes, that figures out to about $8 an hour for drivers — well below the Minneapolis minimum wage — and does not account for time spent waiting for a fare.

“There is not any number that will satisfy Uber and Lyft,” said Eid Ali, president of the Minnesota Uber/Lyft Drivers Association, saying the companies have profited by paying drivers little.

The proposed rates would double fares, said Lyft lobbyist John Reich.

Drivers who testified Tuesday said they feel they have already compromised by coming out in support of the $1.27 per mile, 49 cents per minute rate, far lower than the Minneapolis city ordinance, but felt the companies were not interested in meeting them halfway.

The companies said they thought higher pay would mean fewer passengers because they would increase fares passengers pay.

“We have this experience in other cities, and we know that when you price rides out of the reach of riders that utilization goes down,” said Carlson.

Though the companies’ representatives said paying drivers more would require an increase in fares, some drivers who testified Tuesday asked about the share of each fare pocketed by the companies. Carlson and Reich said because prices are dynamic, the profits from each fare changes.