Fearing Uber and Lyft will leave Mpls., Frey pleads for City Council to soften rideshare pay raise

Minneapolis Mayor Jacob Frey is pleading with Minneapolis City Council members to reject their plan to raise the pay of drivers for Uber and Lyft — or risk both companies leaving the city, and perhaps all of Minnesota.

In an interview Tuesday, Frey emphasized his support for “more than doubling” the rate drivers are paid, and he chided the majority on the council for persisting with a plan he vetoed last year.

This week, Frey increased the urgency of his rhetoric amid the possibility that his veto could now be overridden by a council reshaped by last fall’s election. Uber and Lyft, well aware of that dynamic, have upped their pressure and underscored their vows to cease operations in Minneapolis and perhaps the state on April 1, the date the proposed ordinance would take effect.

“I’m going to make a prediction,” Frey said. “I hope I’m wrong, but I predict the council will pass the exact same ordinance I vetoed last year. And then I’m going to veto it. That’s where it seems to be going.”

Frey added that he has a “real concern” that Uber and Lyft will leave the city, should the council override his veto.

Frey said his fear that the companies will leave town — a threat they have made good on once in a U.S. city — is based on conversations he’s had with officials from Uber and Lyft.

The most strident supporters of the Minneapolis proposal have so far scoffed at the companies’ threats, characterizing them as bluffs or suggesting a local startup could replace the rideshare companies, the only two currently licensed in the city aside from taxis.

At a public hearing last week, one former driver drew applause from drivers supporting the plan when he said he was starting up such a company that would pay drivers whatever standard the council set. The company, Pikapp, had no website yet, he said. The long-distance rideshare company, Hitch, has also inquired with the city, said Amy Lingo, a supervisor in the city’s department of Community Planning and Economic Development. Neither had applied for a city license as of last week.

In 2016, Uber and Lyft left Austin, Texas, after the company failed to persuade voters to undo a city ordinance requiring that drivers be fingerprinted.

A year later, the companies returned to the city — a fact that several Minneapolis council members have cited in casting the companies’ threats as insincere and coercive. But in Texas, Uber and Lyft returned only after the state Legislature passed a law that pre-empted the city requirement, rendering it ineffective.

The Star Tribune has been unable to find any other major American city where either company left, and an Uber spokesman offered no examples when asked. The companies have made similar threats elsewhere.

Uber warned it would leave Seattle if drivers there unionized. The National Labor Relations Board ultimately determined the drivers could not form a union. But that Trump administration-era decision has since been reversed, and the specter of a future union drive hangs over some of the rideshare companies’ concerns about expanding the rights of their drivers.

The threats to leave Minneapolis appear to be entirely about money. The companies have recently increased driver compensation, but many drivers say a yearslong trend of reducing their share of fares has made the once-attractive gig less economically viable.

In 2020, the companies warned they’d leave Seattle if the city approved a minimum wage ordinance similar to the one proposed in Minneapolis. Seattle approved the plan, and the companies didn’t leave, although they argue that their predictions of a less-equitable landscape have come to pass.

In a letter to Minneapolis City Council President Elliott Payne, Jeremy Bird, Lyft’s deputy chief policy and public engagement officer, said the median income of Seattle riders has risen to $103,000 since the wage hike, far above the $56,500 median income of Minneapolis riders, threatening to “make rideshare a luxury good.” Others dispute that the wage requirements are the sole cause of the increase.

In a sign of the lack of productive relations between the Minneapolis City Council and the rideshare companies, Bird wrote that since last year’s failure by the council to override Frey’s veto, “Lyft did not receive a single invitation to meet or work with City Council members or city agencies, nor a single request for information or data, even while the city conducted its own rideshare ‘study,’ ” according to the letter.

Seattle’s drivers are also affected by a Washington state law that raised standards for riders statewide. The companies aren’t fans of that law, but they ultimately supported it as a compromise.

Frey said he believes there is a plan — his counterproposal to the one currently before the council — that the companies could accept.

His proposal would guarantee drivers a minimum compensation of $1.20 per mile and 35 cents per minute, a slight increase from the offer last year.

The council considered a similar scheme earlier this year, but a veto-proof majority of council members voted to move ahead with a plan that guarantees a floor of $1.40 per mile and 51 cents per minute. Supporters said that plan would be the best way to ensure drivers are paid at least the equivalent of the city’s $15.57 hourly minimum wage.

Large groups of organized drivers have consistently supported the bigger increases, and they’ve shown up by the dozens to testify in favor of the council’s plan.

Among those opposed are business groups, including the Downtown Council and Hospitality Minnesota, as well as the disability community, which has rallied those who rely on transportation not offered by public transit. Written comments to the council have ranged from a social worker in Cottage Grove to the Minneapolis aunt of a man who uses county vouchers to obtain Lyft rides for frequent appointments for “lifesaving anti-psychotic medication, his 12-step community” and employment.

“It’s not just getting drunk people home from bars,” Frey said.