Uber and Lyft have pledged to leave the Minneapolis area by May 1 if the rideshare minimum wage equivalent law goes through, leaving students and residents to worry about the future of ridesharing.

The recently approved Fair Rides ordinance was set to increase rideshare drivers’ wages, but following the Uber and Lyft announcements, the Minneapolis City Council will reconsider the ordinance on April 11. Council member Andrea Jenkins (Ward 8) proposed revisiting the ordinance a week after the council overturned Mayor Jacob Frey’s veto. 

Following the council’s overturn of the veto, Uber and Lyft separately announced they would leave Minneapolis, with Uber pulling out of the metro area entirely, on May 1 when the ordinance would go into effect. Many have said the absence of these rideshare services will negatively impact the Minneapolis community.

Jenkins said she proposed the reconsideration largely because of the negative impact the absence of Uber and Lyft would have on the disabled community and special events taking place in the metro area. 

“I think there’s multiple reasons, but the impact on disabled communities is certainly one of them,” Jenkins said. “There was just a Big Ten tournament which was here in Minneapolis last week. Those kinds of activities depend on a reliable transportation network system.”

A Minneapolis city spokesperson said the city has received two rideshare applications for startups, KSTP reported.

A City Council committee announced on March 26 they will consider allocating $150,000 to support new and emerging rideshare companies. The committee said several rideshare companies have expressed interest in obtaining licenses to operate and work under the Fair Rides ordinance. 

“These emerging and expanding businesses are ready to comply with city ordinances and pay minimum wage equivalents and the council members look forward to supporting them in providing services to the city,” the committee said in a Tuesday news release. 

What’s in the rearview?

In an initial 9-3 vote on March 7, the City Council voted to pass the ordinance to create a mandatory minimum wage of $15.75 per hour for rideshare drivers. The approved compensation model would give drivers a $1.41 per mile and a $0.51 per minute rate for their rides. 

Frey later vetoed the ordinance on March 8, but the council overrode the veto with a 10-3 supermajority. 

Ahead of the veto vote, Gov. Tim Walz (DFL) told the Associated Press he was concerned about the impact of the city ordinance. He warned the companies would depart and leave a gap for those who depend on the services, including disabled people. 

Walz vetoed a rideshare pay increase bill in 2023.

Lyft spokesperson C.J. Macklin said the company supports a minimum wage for drivers but disagrees with the implementation of the ordinance. 

“The drastic drop in rides means the thousands of drivers who rely on Lyft for earnings would ultimately make less, creating an unsustainable situation for our customers,” Macklin said in an emailed statement to The Minnesota Daily.

Uber spokesperson Josh Gold said Uber also disagreed with the council’s decision but that they would work with drivers, riders and state leaders to guarantee drivers a fair minimum wage, protect drivers’ independence and maintain affordable rides.

“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,” Gold said in an emailed statement to The Daily. 

The only time the services left a city was when Austin, Texas, tried to require fingerprinting drivers as part of their “Rides with Austin” program. Uber and Lyft did not leave Seattle and Washington state despite cost of ride increases in those locations, CBS reported.

The Washington state drivers union pushed increasing ride costs in 2022 and currently are the best-paid drivers in the nation with a minimum pay of $1.17 per mile, $0.34 per minute and a $3 per trip minimum, according to CBS. Seattle, Washington, passed $1.33 per mile, $0.57 per minute and a $5 trip minimum for drivers.

The ride ahead

Sheri Wegner, executive director of ConnectAbility of MN, said she hopes the reconsideration will open conversations between rideshare companies and the City Council to keep Uber in the metro area and Lyft in Minneapolis.

“I would ideally like to see it happen prior to the May 1 activation because if it happens afterward, then those services are not available and those people will potentially lose their jobs, will potentially lose their housing because they are taking longer to come up with a plan or negotiation,” Wegner said. “It is actually very much of a timely issue.”

ConnectAbility of MN provides a wide range of transportation options and at-home services to people with disabilities, elderly people, people with special needs and more. ConnectAbility of MN also partners with Lyft to help transport the 2,700 people they serve in Hennepin County. 

Wegner said starting May 1, people who use rideshare services to get to work could lose their employment, which would then threaten their ability to pay for housing, groceries, mental health services, healthcare and more. Wegner added without rideshare services, people with disabilities’ independent living will decline and their freedom to socialize will be limited. 

“This issue is not just about people who want to drive back and forth to a bar and be sober,” Wegner said. “This is life-changing for so many people.”

Jenkins said she has been a strong advocate for the disabled community during the ordinance decision process because she lives with multiple sclerosis (MS). MS is a disease where the body’s immune system attacks the protective covering of nerves in the brain, optic nerve and spinal cord, making it difficult to walk, among other issues.

“A community needs spokespeople to be able to make our world more accessible for differently able folks,” Jenkins said. “I live with multiple sclerosis. There is an element of self-interest and involvement as well as certainly advocating for the community.”

Since Jenkins announced the reconsideration of the ordinance, Macklin said Lyft is hopeful the council’s discussion will fix the damaging ordinance.

“Despite the fact that the Council has repeatedly rejected offers to collaborate on this important issue, we are encouraged that they are now open to reconsidering their extremely damaging ordinance,” Macklin said in an emailed statement. 

Macklin and Gold both said Lyft and Uber support legislation based on the state’s comprehensive study outlining $0.49 per minute and $0.89 per mile. Gold said Uber is ready to have further conversations with the Council to guarantee fair wages for drivers. 

“We are eager to have more conversations with the Council, in fact, we would support legislation that protects drivers’ independence and bases rates on the comprehensive state study,” Gold said in an emailed statement to The Daily. 

Jenkins said the City Council will have more communications with state legislators and rideshare companies and added they are not trying to kick Uber and Lyft out of the Twin Cities. 

“We are not running Lyft and Uber out of town,” Jenkins said. “The main goal of this action that the City Council has taken is to really ensure that drivers are receiving a fair wage.”

Following the initial 9-3 vote, the Minnesota Department of Labor and Industry published a comprehensive study of driver earnings and pay standards options, which detailed drivers’ hourly wage at $14.48 after factoring in expenses for total miles driven during working time. The drivers’ gross average hourly wage was $30.27 without factoring in expenses. 

Macklin said the researchers and study were deeply flawed, dishonest and counterproductive to effective policy-making. The transportation study was led by James Parrott and Michael Reich, who have conducted similar studies about transportation and rideshare in Seattle and New York. 

“From the start, we have expressed grave concerns with the selection of James Parrott and Michael Reich as researchers for this study because of their long track record of error-filled analysis that has been repeatedly called into question by their academic peers,” Macklin said in an emailed statement to The Daily. 

What people are saying

Second-year University of Minnesota student Charlie Parece said Uber and Lyft are preferable for getting around campus from a speed and cost perspective.

“At the beginning of the school year, I Ubered back from Coffman Memorial Union because I had heatstroke and couldn’t walk,” Parece said. “I think the limiting factor for [Gopher] Chauffeur is that it takes a while to get there and you have to call a couple hours in advance.”

Second-year University student Irisa Zhou said although she thinks Uber underpays their drivers, she is worried about finding alternative transportation. 

“Maybe I could go out in advance earlier than I expected to take the light rail to the airport, but the time schedule would be a problem,” Zhou said. “You have to leave two hours earlier.”

University economics professor Beth Allen said in an email to the Minnesota Daily drivers receiving more money per trip could have a variety of impacts, including more people wanting to drive for Uber and Lyft, an increase in the cost per trip or drivers being more likely to take work outside of the Uber and Lyft apps.

Allen said the availability of Uber and Lyft is a good thing from a safety, convenience and accessibility perspective, especially since Minneapolis currently only has fourteen officially licensed taxis. Alternatives might not function as well as Uber and Lyft, she said.

“I also don’t want to be forced to install one or more unknown local apps for my phone for each city I visit,” Allen said. “If Minneapolis or Minnesota gets a reputation for failing to have Uber/Lyft available, this could have negative consequences for our local tourism industries, including future convention business.”

Allen said Minneapolis should not attempt to set prices or attract workers into the rideshare industry by mandating higher pay when other employers are struggling to attract employees given low unemployment rates.

Public health professor Traci Toomey said in an email to The Daily that while there are laws prohibiting driving under the influence, many people still drive impaired. She said relying on only designated drivers will not solve the problem.

“Uber/Lyft are one option for many people to get home safely,” Toomey said in the email. “I am concerned that not having this option could increase the number of people driving while impaired.”

University transportation professor Yingling Fan said it is unfortunate Uber and Lyft are considering pulling out of Minneapolis and believes it is reasonable to request a private company to conform with the minimum wage in the city. She said even if Uber and Lyft are not economically feasible using their operation model, public transit agencies could potentially provide a similar service by providing a subsidy to such mobility services. 

“If a private company is not willing to meet the minimum wage standard, and a government agency would be interested in subsidizing their operations in the city, then I think that’s a good question to be discussed at the negotiation table,” Fan said. “From the social welfare perspective, I think it’s important to figure out a solution where we keep those companies in our city.”

Fan said transportation is a basic human right and something that cannot be commodified. 

“Without transportation people cannot fully participate in society, in terms of reaching job opportunities, meeting with family and friends and going to health care providers,” Fan said. “Transportation is necessary to function in society.”

Minneapolis rideshare after May 1

Despite concerns about available transportation options, there are a number of other rideshare services that expressed interest in filling the gap left by Uber and Lyft.

Wegner said there are other transportation options in the area like Metro Transit and taxis, but if people do not live near a bus stop, that is not a good option for them. Wegner added the number of taxis in Minneapolis is dwindling, limiting travel.

Metro Mobility is a public transportation service for people who are unable to use fixed-route services due to a disability or health condition. Metro Mobility can pick people up from their homes and drive directly to their destination. 

Metro Mobility spokesperson John Schadl said there are significant differences between Metro Mobility and rideshare services, such as vehicles equipped with services for people with disabilities, door-to-door service and drivers having specific training to ensure safe rides. 

“While we’re uncertain what the impact of removing Uber and Lyft from Minneapolis will be, we are currently positioned well to continue serving our clients,” Schadl said in a statement to The Daily.

Uber/Lyft alternative Empower, a Minneapolis startup Pikkapp and Texas service Wridz have all expressed interest in moving into Minneapolis, Axios reported.

Murid Amini, founder of MOOV rideshare company, said MOOV drivers would keep 80 percent of the price of the ride compared to Uber and Lyft, which do not have the same rates.

“I don’t have thousands of Silicon Valley employees or millions of dollars of legal fees racked up, and hopefully I won’t,” Amini said. “Really, my costs at this point are going to be the licensing, the insurance and then some of the administrative and marketing costs.” 

Amini said the cost structure of Uber and Lyft is increasing costs, and MOOV does not have that issue. Amini added Uber and Lyft’s history of paying drivers without generating revenue, fighting the taxi industry and needing to turn a profit with their huge cost structure all impacts their pricing.

Amini hopes to roll out his rideshare service by May 1.

“I think it’s very possible that Uber and Lyft really move forward with their exit from the market,” Amini said. “Then it’s a question of, who can get in there and get passengers and drivers the quickest?”