Minneapolis wonders: Was rideshare deal worth the trouble?

A core group of Minneapolis City Council members took a self-described “victory lap” Thursday for a statewide plan that will create minimum pay for Uber and Lyft drivers — and keep the rideshare giants from leaving the Twin Cities.

Meanwhile, their critics, including Mayor Jacob Frey, questioned whether all the drama was worth it, given the final plan was strikingly close to one on the table months ago.

“They would have avoided what the whole city just went through,” Frey said Thursday, referring to scrambling by tourism, business, airport and transit leaders to prepare for an exodus by Uber and Lyft. The companies had pledged to leave the city and perhaps the state if stricter regulations went into effect July 1.

The plan, approved by state lawmakers on the final weekend of the legislative session, was praised by activist drivers seeking minimum pay — and is amenable to Uber and Lyft, which now will stay.

The compromise, expected to be signed by Gov. Tim Walz, strips Minneapolis of its ability to ever regulate rideshare driver pay. That amounts to a blow to those pushing it — and was even an idea supported by Republicans — but it’s a dynamic that several council members said they now believe was inevitable.

As a result of that state “preemption,” on Thursday the council took several technical actions that repealed and killed the city ordinance that was to take effect July 1, ending the city’s 18-month foray into rideshare regulations.

While Council Members Robin Wonsley, Jason Chavez and Jamal Osman called the preemption a “historic betrayal by Governor Walz,” they also claimed victory for pushing an issue that survived three vetoes in two years and likely wouldn’t have been taken seriously in the absence of a determined coalition of what Wonsley described as “socialist and progressive allies.”

Indeed, the way the controversy captivated the entire DFL-controlled Legislature in its final days revealed the growing influence of farther-left elected leaders from Minneapolis.

Last year, a similar city ordinance was vetoed by Frey. A parallel statewide plan championed by Sen. Omar Fateh, DFL-Minneapolis, was approved by state lawmakers but vetoed by Walz.

This year, the City Council, now controlled by a more progressive majority, brought the plan back, rebuffed Frey’s offers for a middle ground acceptable to the rideshare giants, and overrode the mayor’s veto. The move started the clock on the possibility of the state’s largest city being left without a major rideshare provider.

At the Capitol, Fateh, a crucial vote in the closely split Senate, led a plan that was similarly unacceptable to Uber and Lyft — although Fateh and others always questioned whether the companies would make good on their threats.

Fearing election-season consequences for the DFL, Walz and legislative leaders brokered the compromise that guarantees drivers will earn more than they do now, but significantly less than what the council and Fateh originally sought.

At a news conference before Thursday’s council meeting, Fateh joined Wonsley, Chavez, Osman and Aurin Chowdhury, as well as Council Vice President Aisha Chughtai and Council President Elliott Payne, in what Osman described as a chance to “take a victory lap” in what they cast as a workers-rights struggle against multinational corporations whose practices exploit drivers, most of whom are people of color.

“They were taken down by workers, by drivers,” Fateh said of Uber and Lyft.

Council Member Jeremiah Ellison, part of a 10-member supermajority that overrode Frey’s veto in March, said council members should be proud of what they accomplished.

“Sometimes good policy happens because of pressure,” Ellison said. “When the pressure was off, the state did not act. ... I believe at several points in the process, had the council not proceeded, the state would not have proceeded.”

Council Member Linea Palmisano an ally of Frey who voted against the original ordinances, said she was pleased with the final outcome for drivers, many more of whom will now earn the equivalent of the city’s $15.57 hourly minimum wage.

But she chastised her colleagues for acting “hastily and recklessly” and taking everyone on a “wild ride,” including throngs of riders, among them some advocates for people with disabilities who weren’t OK with risking losing Uber and Lyft.

“They ignored concerns of their constituents who rely on these services,” Palmisano said. “When I hear my colleagues declare victory, I need to call their bluff.”

Because of the way Uber and Lyft change their prices based on demand, determining how regulations affect what drivers earn has proved challenging. But this much is clear from a state-commissioned analysis released earlier this year: Previously, many drivers earned the equivalent of sub-minimum wage after necessary expenses. Now, many of them will earn more than that.

The new regulations call for drivers to earn at least $1.28 per mile and 31 cents per minute while transporting riders. That’s well below what the council passed when it overrode Frey’s veto in March, but similar to what Frey had counter-proposed in an attempt to avoid an override: $1.20 per mile and 35 cents per minute. According to an analysis by the Service Employees International Union and the Minnesota Reformer, the state plan offers the hourly wage equivalent of $19.89 after expenses, 9 cents more than Frey’s offer and a 14% raise over average driver earnings.

The meager difference didn’t escape Frey.

“They’re now excited that they passed a rate they already rejected?” he said. “We could have had that in place for months and avoided all the rigmarole — and never needed preemption.”

The statewide rate will take effect Jan. 1.