Uber, Lyft resume threats to leave Minneapolis over new driver wage plan

The Minneapolis City Council has resurrected plans to raise wages and expand the rights of Uber and Lyft drivers — and the companies have resurrected their threats to leave town if those plans move forward.

The battle, strikingly similar to one that played out last year, sprang anew before a Minneapolis City Council committee Tuesday. The subject of a public hearing was a proposed ordinance that would pay drivers a minimum of $1.40 per mile and 51 cents per minute while transporting riders on any trip within the city limits, among other guarantees.

Mayor Jacob Frey vetoed a similar plan last year. The primary difference this year could be political math: Following last year’s election, the council has shifted slightly left, and it’s possible the current council could override his veto where the last council didn’t — if things head that way.

Tuesday’s hearing featured a parade of drivers showing screenshots of their apps supporting their basic argument: They get paid far less than most riders realize, and their earnings have fallen steadily in recent years as the global rideshare companies take larger cuts of fares.

Meanwhile, opponents, including several prominent business organizations such as the Downtown Council and Hospitality Minnesota, sent letters warning that the effect of the ordinance would be higher fares resulting in fewer riders, ultimately leading to fewer options for people to get around, whether they’re dining downtown or relying on a ride to get to the grocery store.

The arguments in Minneapolis are playing out against a familiar statewide backdrop as well. Last year, Gov. Tim Walz vetoed a similar plan passed by lawmakers. Both sides are again pressing their cases at the Capitol.

State Sen. Omar Fateh, DFL-Minneapolis, who is spearheading such efforts at the Legislature, spoke at Tuesday’s hearing, assuring council members that the proposed city plan will complement his state plan. “We’re working in partnership,” he said.

There’s a lot of high rhetoric, dueling data points, and deep-in-the-weeds details of dollar amounts associated with the debate, but it all comes down to this: The Minneapolis proposal pays drivers more than the ride-hailing companies are willing to support.

Supporters on the council say their goal is to get drivers paid the equivalent of a minimum wage. They studied three schemes of setting minimums and settled on the highest-paying one after a council researcher concluded it was the best way to ensure drivers received at least the equivalent of the city’s $15.57 hourly minimum wage under the varying scenarios that drivers face.

The most prominent group, Minnesota Uber/Lyft Drivers Association (MULDA), has been ever-present in the state and local debate for the better part of two years and supports the Minneapolis plan. A splinter group, MULDA Members, hasn’t always been in agreement, but on Tuesday MULDA Members spokesman Yusuf Haji drew applause from the audience when he announced his group also supports the plan.

Since the battle played out last year, both Uber and Lyft have instituted a $5 minimum payment to drivers for all rides and have committed to other standards. They’ve also upped their local lobbying and PR campaigns. Uber, for example, hired a local PR firm and the firm circulated a letter this week signed by nearly 150 local drivers supporting not the Minneapolis proposal, but a New York settlement that set minimum pay and other protections, such as paid sick leave.

When Walz vetoed last year’s measure, he said more data was needed and established a commission to study the matter. When Frey vetoed last year’s measure, he pointed to that commission, saying their work — including their recommendations based on that data — was needed before a decision could be made.

Walz’ commission, which included drivers and representatives from the ridesharing companies, concluded its work without making specific recommendations for driver compensation. But a study by the state’s Department of Labor and Industry has yet to be completed. Now, Frey is pointing to that study, expected next month, in making a familiar argument to last year: More data is needed.

On Tuesday, Frey released a statement noting that he wants to increase pay for drivers but does not want to risk Uber and Lyft leaving the city.

“I don’t care about Uber and Lyft’s bottom line,” he said. “What I do care about is access to jobs for rideshare employees and access to a critical service for riders. It is our job as policymakers to consider the impact of our actions – not make policy decisions that could ultimately hurt the same people we are trying to support.”

The council could vote as soon as March 7.