Uber and Lyft are quitting Minneapolis over a driver pay increase

Estimated read time 3 min read

Uber and Lyft plan to end operations in Minneapolis after the city council voted to increase driver pay. The council passed an ordinance on the issue last week. On Thursday, it voted to overrule a mayoral veto of the measure.

The new rules stipulate that ridesharing companies need to pay drivers at least $1.40 per mile and 51 cents per minute (or $5 a ride, whichever is higher) whenever they’re ferrying a passenger. Tips are on top of the minimum pay. According to the Associated Press, the council passed the ordinance to bring driver pay closer to the local minimum wage of $15.57 an hour.

However, Uber and Lyft say they’ll end services in the city before the pay rise takes effect on May 1. Lyft says the increase is “deeply flawed,” citing a Minnesota study indicating that drivers could meet the minimum wage and still cover health insurance, paid leave and retirement savings at lower rates of $1.21 per mile and 49 cents per minute. “We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders,” spokesperson CJ Macklin told The Verge.

An Uber spokesperson told the publication that the company was disappointed by the council’s choice to “ignore the data and kick Uber out of the Twin Cities,” putting around 10,000 drivers out of work. They noted Uber’s confidence that by working with drivers, drivers and legislators, “we can achieve comprehensive statewide legislation that guarantees drivers a fair minimum wage, protects their independence and keeps rideshare affordable.”

However, Minnesota Governor Tim Walz last year vetoed a bill to boost wages for Uber and Lyft drivers, citing concern over the state becoming one of the most expensive places in the country for ridesharing. Other jurisdictions have mandated minimum driver pay for ridesharing services, including New York City, where the rate starts at about $18 per hour.

If Uber and Lyft follow through on their threat to quit Minneapolis, that could make it harder for people (particularly folks with disabilities and those who can’t afford a car of their own) to get around. The rise of ridesharing has upended the taxi industry over the last decade or so. As such, a Minneapolis official says there are now just 39 licensed cab drivers in the city, a significant drop from 1,948 licensed drivers in January 2014.

Meanwhile, some upstart ridesharing companies are looking to move in and take over from Lyft and Uber. Empower and Wridz, for instance, have shown interest in starting operations in Minneapolis. Both companies ask drivers to pay a monthly subscription fee to use their platforms and find riders. In return, drivers keep the entire fare.