Mar 7, 2024 - News

Minneapolis could test Uber, Lyft's threats to leave over driver minimum pay

The windshield of a vehicle with visible stickers of the Uber and Lyft logos. The reflected outline of a leafless tree is visible in the windshield.

Uber and Lyft stickers on a car windshield. Photo: Lindsey Nicholson/Getty Images

A proposal to establish a pay floor for rideshare drivers likely has the votes to pass the Minneapolis City Council on Thursday.

  • The big question is what happens next.

Why it matters: Uber has threatened to stop serving Minneapolis if the proposal takes effect. Lyft warned it could leave the state altogether.

State of play: Mayor Jacob Frey told Axios he would veto the current proposal — which sets a $1.40 per mile, 51-cent-per-minute minimum pay guarantee for drivers.

  • Yes, but: Supporters may have the votes to override him.

The big picture: Driver advocates and legal scholars doubt Uber and Lyft's threats. They point out rideshare companies are still operating in New York City, New York state, and Washington state — all places where new rules or legal settlements require higher driver pay.

What they're saying: The ultimatums are "part of the corporate playbook," said Laura Padin of the National Employment Law Project.

  • With limited access to rideshare data, "cities and states are not in a good position to assess the credibility of these threats — and they get scared," Padin said.

The other side: Uber spokesperson Josh Gold said it's "misleading" to suggest that just because rideshare companies have agreed to pay standards elsewhere, they'll be willing to stay in Minneapolis.

Zoom in: Consider Washington, where Uber and Lyft cut a deal on a new statewide law that pays Seattle drivers at rates similar to those Minneapolis is considering.

  • As a result, rideshare driving "has become an occupation that actually gives drivers a living wage," said Kerry Harwin with the Seattle-area advocacy group called the Drivers Union.
  • Harwin said rideshare companies talked tough about reduced service during the debate leading up to Washington's new law — but didn't pull out of the market.

The intrigue: Uber says demand for rides in Seattle has gone down, meaning drivers spend more time waiting to accept a trip — and not getting paid.

  • Lyft says Minneapolis passengers are much less affluent than in Seattle, which suggests it might be harder to run a rideshare business here if passengers can't absorb the increased fares.

Friction point: Uber and Lyft live with these pay increases in Washington state, in part because the law gave them something big: Drivers would remain classified as "independent contractors" who cannot unionize and enjoy fewer rights than full-fledged employees.

  • Lawmakers in Minneapolis and the Minnesota Legislature aren't interested in taking a similar step here.

Threat level: Sergio Avedian, who writes and consults for The Rideshare Guy, says the "only time" Uber and Lyft have made good on a threat to leave was in 2016 when the companies stopped operating in Austin, Texas, over new fingerprinting regulations.

  • In their absence, new rideshare companies stepped into Uber and Lyft's void.
  • Uber and Lyft lobbied the Texas Legislature to void the Austin ordinance, allowing them to reclaim the market in 2017.

"I'm calling it a bluff," Avedian said of the Minneapolis threats — and if Uber and Lyft do leave, it'll be as a pressure tactic to try and cut a new deal, he says.

What we're watching: Frey told Axios he's "not sure they're going to have the votes" to override his veto.

  • The mayor has consistently called for a more modest pay increase, offering a compromise that he believes will keep the companies in town: a pay floor of $1.20 per mile, 34 cents per minute.
  • "If this is not about politics," he said in an interview. He urged the council to "pass the ordinance that I will sign."

What's next: The full council meets Thursday morning at 9:30am.

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