Minnesota can do better than Uber and Lyft

Opinion editor’s note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. To contribute, click here.

•••

Many Minnesotans are concerned about the potential loss of rideshare apps Uber and Lyft after last week’s vote in Minneapolis that could result in the end of Minneapolis and even metro operations on May 1. But what those companies and many local users don’t know is that Minnesota is uniquely capable of quickly replacing them with even better services.

The Minneapolis City Council ultimately voted 10-3 to enact an ordinance that requires Uber and Lyft to pay drivers $15.57 per hour — the equivalent of the city’s minimum wage. This is an easily achievable wage for Uber, which reported that it earned $37 billion through its apps in 2023 while doubling its stock price from the previous year.

That success came at the expense of both its drivers and passengers. A recent analysis in Forbes concluded that Uber CEO Dara Khosrowshahi “has raised U.S. ridehail prices considerably faster than the rate of inflation while cutting driver pay during several periods … despite soaring inflation in auto operating costs borne by Uber’s millions of U.S. drivers.”

Khosrowshahi’s own compensation in 2023 was $24.3 million, a 22% increase from his salary in 2022.

None of this is a surprise. Uber and Lyft are less rideshare companies than they are costshare companies, highly effective middlemen who extracted outrageous fees from riders and maneuvered for lower pay to the drivers who did the actual work. They are corporate machines, far removed from Minnesota, whose primary objective is to increasingly enrich their executives and shareholders. As veteran Wall Street Journal tech reporter Kara Swisher characterized Big Tech and Silicon Valley in the very first sentence of her must-read new book “Burn”: “As it turned out, it was capitalism after all.”

But Minnesota doesn’t need to be subject to these high prices, low wages, extraction of capital and systemic disrespect.

Minnesota has all of the talent to create its own rideshare apps. The state has a large community of highly skilled programmers, developers and software engineers. There are countless user experience designers, graphic designers, marketing specialists, social-media experts, veteran project and program managers, capable executives and financial officers, and, yes, sources of capital.

Minnesota also has the advantage of the absence of large tech firms that have overtaken other comparable tech hubs like Seattle, Austin, Chicago, Denver and other metro areas. This also makes all of that talent more affordable.

And Minnesota has the good fortune of timing. Many tech firms have laid off tens of thousands of employees in the past two years. The promise of AI is being realized and made available for companies to use. Tech itself has scaled internationally since the introduction of apps in the late 2000s, and help if needed can be outsourced inexpensively to Eastern Europe, India, South America and throughout Asia at lower prices, faster timelines and less oversight.

The cost to begin a rideshare service can be as little as free, as people in parts of the country have started such enterprises through text messaging or social-media pages. A basic app could be made and published (in less than a matter of weeks!) in Apple’s iOS and Google’s Play stores for as little as a few thousand dollars.

Locally developed app or apps have the advantage of better meeting the needs of users — specifically people with disabilities or special needs, women and LGBTQ+ passengers and drivers who would like more privacy and protections, elderly riders who need more care, and families with their own safety and convenience needs. After all, the smaller the company, the closer and more responsive it is to its customers.

And such apps would be more capable of treating their drivers fairly, being more transparent about corporate operations and, of course, paying them more money.

While much of the discussion has moved to the state level at the Legislature and Gov. Tim Walz’s office, that focus has been on how to make a deal with Uber and Lyft. But by childishly threatening to immediately end service, these companies are not showing Minnesotans the respect they deserve. Those efforts should move instead to convening the tech and business communities to quickly explore the prospect of creating replacement apps.

But Uber and Lyft aren’t entirely undeserving of thanks from Minnesotans. For over a decade, they taught drivers and users how not to operate rideshare services that actually care about people. So thank you, but no thanks. With this opportunity, some courage, a little time and with the right coalition of leadership, the talent we have in Minnesota can replace them locally, and eventually compete with them in other markets. We can take the wheel from here.

J. Dan E. Maruska has worked in journalism and tech in Minnesota for 25 years. He started the blog ABetterMinnesota.com, which merged with the Alliance for a Better Minnesota in 2012.