Lyft, Uber To Shut Down In Minneapolis As City Council Mandates Increase In Driver Pay

Both Lyft and Uber have announced their decision to halt operations in Minneapolis following the city council's insistence on raising driver wages to match the local minimum wage of $15.57 per hour. This move comes after the council voted to override a mayoral veto, solidifying the decision to enforce the wage increase.

Lyft, in a statement, criticized the ordinance as "deeply flawed," expressing support for a minimum earning standard for drivers but opposing the specific terms outlined by the council.

The company cited concerns about the sustainability of its operations under the new regulations, leading to the decision to cease operations in Minneapolis effective May 1.

Uber, although not immediately available for comment, reportedly issued a similar statement, indicating its intention to follow suit and suspend services on the designated date.

Both companies have pledged to advocate for statewide legislation that would counter the Minneapolis ordinance. In a move reflecting this stance, state House Republicans proposed a bill aimed at preempting local regulations of ride-hailing services.

The contentious measure, initially passed by the City Council in a 9-4 vote despite Mayor Jacob Frey's opposition, mandates ride-hailing companies to compensate drivers at a rate of at least $1.40 per mile and $0.51 per minute spent transporting a rider. This amounts to a minimum of $5 per ride, excluding tips, with exceptions made for multi-city trips, where the requirement only applies to the portion within Minneapolis.

Critics argue that the implementation of such measures will likely result in increased costs for riders, potentially impacting low-income individuals and those with disabilities who heavily rely on ride-hailing services. Conversely, supporters contend that these regulations are essential to address the exploitation of drivers, particularly individuals from marginalized communities, who have been providing labour at below-subsistence wages.

Governor Tim Walz, a Democrat, expressed concerns over the potential ramifications of Lyft and Uber's departure, highlighting the significant reliance placed on these services, especially by disabled individuals. Walz emphasized the need for a legislative compromise that ensures fair compensation for drivers while also incentivizing the companies to continue operating in Minneapolis.

This development in Minneapolis mirrors similar initiatives undertaken by cities like Seattle and New York City, which have implemented policies aimed at bolstering wages for ride-hailing drivers without prompting the withdrawal of Lyft and Uber from their respective markets.