Uber and Lyft Consider Exiting Minneapolis Following City Council Decision

Uber and Lyft are threatening to pull out of Minneapolis after a City Council vote guaranteed a minimum hourly wage to drivers, sparking a heated debate over fair pay in the gig economy.

The council voted 10 to 3 to override a mayoral veto of an ordinance that mandates ride-hailing services to pay drivers a minimum rate of $1.40 per mile and 51 cents per minute, ensuring they earn the local minimum wage of $15.57 per hour. This move has prompted both Uber and Lyft to announce they will cease operations in the city when the law goes into effect on May 1, with Uber even planning to exit the entire Minneapolis metro area.

The companies argue that the increased costs will have to be passed on to riders, ultimately resulting in drivers earning less. Lyft called the bill “deeply flawed” and warned that it would make rides unaffordable for most Minneapolis residents.

This wage ordinance is the latest in a series of minimum wage laws for gig economy workers, as tensions rise between workers and gig companies over fair compensation. Similar laws have been implemented in New York City, Washington, California, and Seattle in recent years.

Critics of the Minneapolis bill, including the mayor and Minnesota’s governor, argue that it will have negative consequences. However, supporters like City Council member Jamal Osman, who coauthored the law, believe it is necessary to ensure that drivers, many of whom come from low-income or immigrant communities, are fairly compensated.

The companies are expected to lobby for a state bill that could overturn the Minneapolis ordinance, as state legislators have proposed minimum pay standards for ride-hailing drivers at a slightly lower rate. The outcome of this battle between gig companies and local governments will have significant implications for the future of work in the gig economy.