Minneapolis rideshare controversy shows growing power of progressive Democrats

As Uber and Lyft threaten to leave Minneapolis — or possibly the whole state — the debate has shown the power of progressive legislators and City Council members, even as a more centrist governor and mayor take a more conciliatory tack.

Minneapolis Mayor Jacob Frey and Gov. Tim Walz’s administration are searching for compromise with the rideshare companies, but their fellow DFLers on the City Council and Legislature are pushing for a driver pay raise that Uber and Lyft oppose. The debate has highlighted the growing influence of progressives who lean further left than traditional Minnesota Democrats. They are casting the issue as a workers’ rights battle.

In a state Senate with a one-vote DFL majority, one senator has enormous leverage as caucus leaders try to keep members in lockstep for another week. In Minneapolis City Hall, the addition of two progressive council members in November changed the balance of power. Progressive leaders are feeling their influence.

“I think the caucus is united,” said Sen. Omar Fateh, DFL-Minneapolis, who is carrying the bill in the Senate.

But the governor’s administration has signaled it is not comfortable with the pay rates in the bill, making its fate unclear.

Walz vetoed a driver pay-minimum bill last year, and Fateh vowed it would be his top priority in 2024.

Republicans in the DFL-controlled House have limited leverage. In the narrow-margin Senate, it’s less clear; one GOP senator, Jim Abeler of Anoka, has been involved in the talks, explaining he wants to try to keep the companies from leaving.

Because they’re not employees, drivers aren’t subject to any minimum wage requirements. The state-commissioned analysis concluded Minnesota drivers often earn below the equivalent of minimum wage after expenses.

Over the summer, the governor ordered the Department of Labor and Industry to commission a study to estimate what pay rates would be necessary to approximate the Minneapolis minimum wage after drivers’ expenses. That study recommended rates of 49 cents per minute, and either 89 cents or $1.21 per mile, with a higher rate providing more benefits for drivers.

The Minneapolis City Council passed a higher pay rate: 51 cents per minute and $1.40 per mile. But on May 6, progressive leaders of the City Council announced a compromise rate with DFL leadership in the Legislature and Fateh, a self-described democratic socialist aligned with the majority on the City Council. They could come down to $1.27 per mile and 49 cents per minute.

But that compromise did not include Walz or his administration — or either of the rideshare companies. Walz called it a “step in the right direction” and Labor Commissioner Nicole Blissenbach has sounded cautious notes in recent hearings.

“The administration remains committed to engaging with stakeholders and the authors,” she said, “to build agreement on a pay standard supported by the study and data that ensures drivers are paid fairly, and will keep these important services available to the citizens of Minnesota.”

Fateh said he does not see the companies as willing to compromise, even to the lower of the two rates in the Department of Labor and Industry’s report.

After the compromise was released, both companies said it would be unworkable. Lyft said they would double fares, and one of Uber’s representatives suggested 68 cents per mile.

The politics inside Minneapolis City Hall, where no elected Republicans serve, are easy to break down: The further-left is more powerful than the relatively moderate left that includes Frey.

Last year, Frey vetoed a similar rideshare ordinance, and an attempt to override that veto failed.

But November’s city election resulted in a slight shift to the left with the election of two new council members, and that coalition brought the driver pay hike back this year. When Frey vetoed it, he was overridden.

As such, despite the mayor and his appointees being the official voice of the city at the Legislature, he’s been all but iced out of the recent talks with lawmakers. Instead, it’s been a small group of City Council leaders in the room negotiating with DFL leaders in the Legislature.

The rideshare sector is just one place progressives are flexing their muscle. In Minneapolis, they’ve overridden Frey’s veto of a contentious resolution on the Israel-Hamas war and are drafting more-permissive policies for homeless encampments, among other initiatives.

The Legislature’s progressives have so far had less of an impact, with leadership conscious of the razor-thin margins and moderate members who may not always be on board with their colleagues further to the left. But because DFL majorities can’t afford to lose any votes, progressives have chipped away at the edges on issues like sales taxes and zoning.

The compromise group has been skeptical that Uber and Lyft will follow through on their threats to leave, or that rates in a bill now moving through the Legislature would even force them to operate at a loss.

House Majority Leader Jamie Long said the rates are consistent with what Uber and Lyft pay drivers in Washington state — not just in Seattle, but in smaller cities. “They’ve been able to stay and operate profitably,” said Long, DFL-Minneapolis.

Whether the Legislature and Walz agree to any pay minimum, Uber and Lyft appear poised to leave unless the minimum falls significantly. The compromise figure is $1.27 per mile, and Uber has pitched 68 cents — a number from which, Fateh observed, the company has not moved.

Even if a number emerges that’s acceptable to the companies, there is no appetite among DFL legislators to force it on Minneapolis — the one idea that has widespread Republican support.

As of this past week, there seemed to be little inclination among City Council members to compromise more, leery of the companies’ claims and buoyed by new rideshare operations preparing to enter the market.

Though the legislative session is set to end May 20, the true deadline will be July 1, the effective date of the Minneapolis ordinance and the date both companies have said they’ll cease operations.