Veto-proof Minneapolis City Council approves rideshare driver pay hike; Frey vows veto anyway

Dismissing Uber and Lyft’s vows to leave town and declaring a victory for a sector of underpaid workers, a veto-proof majority of the Minneapolis City Council on Thursday approved a pay increase for rideshare drivers that Mayor Jacob Frey immediately pledged to veto.

The vote was 9 to 4, enough to override a veto if that vote were to hold.

If the council overrides the promised veto this month, both ride-hailing companies said Thursday they would cease operations in the city — and perhaps Minnesota — on May 1, the day the pay increase would take effect.

Uber and Lyft are the only two rideshare operations licensed to operate in Minneapolis, although several entities have indicated an interest in starting up in the city.

Supporters, including organized groups of drivers and some labor advocates, say the approved minimum pay scales and other protections are the best way to ensure drivers earn the equivalent of the city’s $15.57 hourly minimum wage. While driving for Uber or Lyft is often seen as a side gig, it has become the sole source of income for many drivers.

“If employers leave because they are paying sub-minimum wages and companies step in who pay minimum wages, I believe that’s a win for our city,” said Council Member Jason Chavez.

Uber and Lyft, however, say the minimums are too high to make doing business in the city worthwhile. To preserve their margins, the companies say, they would have to nearly double fares, resulting in so few riders that their business model would collapse.

The vote came on the eve of a state report that could explain which rates would equate to specific actual earnings for drivers — a tricky figure to nail down in the dynamic pricing universe of ridesharing.

An attempt to delay the council vote until that report, which is being conducted for the Department of Labor and Industry, was available fell short Thursday.

Before the vote, Frey pleaded for the council to wait for the report and soften its demands to a level that he said Uber and Lyft would accept — but would still effectively nearly double the rates drivers earn.

The measure approved Thursday is similar to one the mayor vetoed last year.

Opponents of the plan include business leaders and bar and restaurant associations. Some in the disability community also are concerned. They note that some people unable to drive rely on rideshare companies, often with public aid vouchers, to travel to work and medical appointments or to see friends and family.

However, David Dively, executive director of the Minnesota Council on Disability, said Uber and Lyft shouldn’t be considered an integral part of transportation for people with disabilities because few rideshare vehicles are wheelchair-accessible.

In the past week, the rideshare companies increased pressure on City Council to reject the pay increase. Uber took out ads on the home page of the Star Tribune and on local radio, and Lyft wrote to council members, appealing to their sense of economic justice by offering figures showing that the typical Minneapolis rider is working class.

During the second quarter of 2023, some 7,000 Uber drivers provided nearly 300,000 rides in the metro area, according to figures the company supplied.

Following Thursday’s vote, Uber issued a statement suggesting it would seek to pre-empt the city’s ordinance via state law, implicitly as a way to return after leaving.

“Uber supports comprehensive statewide legislation that guarantees drivers $35/hr minimum earnings while working and protects their flexibility and independence,” the statement read. “If this ordinance is enacted, we look forward to working with drivers, riders and the legislature to bring rideshare back.”

Lyft released a statement restating its intent to leave if nothing changes.

“For the second time in less than a year, the bill sponsors have willfully chosen to ignore offers to collaborate, instead choosing to rush through the most extreme figures possible,” the statement read.

“We implore Mayor Frey to veto this legislation and instead join our efforts to pass a statewide minimum earnings standard that can balance the needs of all. Otherwise, we will no longer be able to operate in the city once the bill takes effect on May 1.”

It’s difficult to gauge driver sentiment. More than 300 Lyft drivers signed an online petition opposing the plan, and some have complained that a small, vocal group of supporters dominated the public discourse.

The drivers who attended the council’s vote Thursday overwhelmingly cheered.

“This is great! This is historic! Thank you, council members,” driver Farhan Badel shouted.

Matthew McGlory, who said he’s driven more than 10,000 trips for Lyft and nearly as many for Uber, said he earns less than half the price the rideshare app shows to riders — with tip included.

He said he doubts Uber and Lyft would leave Minneapolis because of the amount of business travel, the Delta Air Lines hub at Minneapolis-St. Paul International Airport and the large number of national events held in the city.

“I think that is a poker bluff,” McGlory said.

Seeing big companies make 60% of ride income when the drivers provide the service doesn’t make sense, said Marianna Brown, who was a rideshare driver in New York before driving in Minneapolis.

”Why should we let the big corporations make all the money when we as little people make nothing?” Brown asked.

The plan approved Thursday guarantees a floor of $1.40 per mile and 51 cents per minute. The driver of a wheelchair-accessible vehicle would get $1.81 per mile. Frey had pushed for a minimum payment of $1.20 per mile and 35 cents per minute.

The approved plan includes additional provisions, including a $5 minimum payment for any ride, annual increases for drivers and restrictions on how money can be deducted from drivers’ wages.

Voting in favor were Council President Elliott Payne, Vice President Aisha Chughtai and Members Robin Wonsley, Jeremiah Ellison, Jamal Osman, Katie Cashman, Andrea Jenkins, Jason Chavez and Aurin Chowdhury.

Voting against were Council Members Michael Rainville, LaTrisha Vetaw, Emily Koski and Linea Palmisano.

The state study, which is expected to be released Friday, comes amid a push to raise the pay and working standards of rideshare drivers across Minnesota.

The Legislature passed a driver pay plan last year, but Gov. Tim Walz vetoed it amid opposition from Uber and Lyft.

Walz established a task force, including drivers and company representatives, to look into the matter and recommend a plan. The group finished its work without specific rate recommendations but before the new study had concluded.

The study is the first in Minnesota to examine aggregate data from the rideshare companies and one Frey said the council should have waited for.

”The statewide report is literally going to be released tomorrow,” Frey said Thursday. “It’s irresponsible to pass policy today when we’ll have the data tomorrow.

Supporters of the council’s plan said they could change the rates before they become effective May 1.