Ride-hailing companies Uber and Lyft will cease services in Minneapolis beginning May 1 should a new law go into effect that would raise the minimum pay for the companies' drivers, each company said.
The Minneapolis city council initially passed the measure last week, which would increase driver wages to the equivalent of the local minimum wage of $15.57 an hour, according to the Associated Press. The companies would have to pay drivers at least $1.40 per mile and $0.51 per minute for a ride, or $5 per ride, whichever is greater, excluding tips.
The city's mayor vetoed the bill, but the city council on Thursday overrode that veto.
"This deeply flawed bill has been jammed through despite major concerns being raised by the community," Lyft said in an emailed statement. "We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders. This ordinance makes our operations unsustainable, and as a result, we are shutting down operations in Minneapolis when the law takes effect on May 1. We will continue to advocate for a statewide solution in Minnesota that balances the needs of riders and drivers and hope to return to Minneapolis as soon as possible."
Some critics of the bill say costs will increase for everyone, including low-income individuals and those with disabilities who rely on the ride-hailing services, AP reported, adding that supporters say the services have relied on drivers who are often people of color and immigrants for cheap labor.
"We are disappointed the council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded," Uber said in an emailed statement. "But we know that by working together with all stakeholders—drivers, riders and state leaders—we can achieve comprehensive statewide legislation that guarantees drivers a fair minimum wage, protects their independence and keeps rideshare affordable."
The Minnesota Department of Labor and Industry on March 8 published a report on transportation network companies using trip data from 2022, a survey of 1,827 Minnesota drivers, and Minnesota expenses and benefits data to determine a range of options for a pay standard.
An analysis showed that drivers in the Twin Cities metro area averaged $52.94 per hour in revenue, but on average had a passenger only 58 percent of the time they were logged in and available for dispatch, resulting in gross hourly earnings of $30.27. When taking expenses into account, the amount drops to an average of $14.48 per hour. When looking at median earnings, the figure declines further.
The report provided "scaled-up 2024 base compensation rates for the Twin Cities metro area" of $0.49 per minute and $0.89 per mile, which are lower than the rates set by the new ordinance.
Minnesota Gov. Tim Walz vetoed a bill last year that would have increased pay for drivers, and he told the AP that he was concerned because so many depend on those services, including disabled people. He added that he hoped the legislature would come to a compromise that included fair pay for drivers and dissuaded Uber and Lyft from leaving.
Minneapolis isn't the only place to have passed policies that increase the pay for ride-hailing drivers. New York City in 2022 raised the minimum wage for ride-hailing drivers, which first had been set in 2018. Washington State in 2022 also passed a minimum-wage law for ride-hailing drivers. Uber and Lyft continue to operate in each location.