Lyft and Uber to Halt Operations in Minneapolis Over Minimum Wage Law

Rideshare giants Lyft and Uber are set to cease their services in Minneapolis starting May 1, following the city council’s decision to override the mayor’s veto and implement a new minimum wage law for rideshare drivers.

The city council’s 10-3 vote on Thursday paved the way for rideshare drivers to receive a minimum wage of $15.57 per hour, prompting Lyft and Uber to announce their withdrawal from the city. Both companies expressed concerns about the sustainability of their operations under the new ordinance.

Lyft condemned the legislation as “deeply flawed,” emphasizing that while they support minimum earnings for drivers, the ordinance renders their operations financially unviable. Similarly, Uber expressed disappointment over the council’s decision, highlighting the potential impact on thousands of drivers and riders.

Mayor Jacob Frey, while supportive of a minimum wage for rideshare drivers, opposed the ordinance, citing concerns about its economic feasibility. He underscored the importance of data-driven policy-making, referring to a Minnesota state study that recommended lower pay rates than those mandated by the ordinance.

Frey urged local leaders to find a solution before the impending deadline, emphasizing the potential job losses and adverse effects on the region’s transportation landscape.

The ordinance stipulates minimum earnings for rideshare drivers based on mileage and time spent within Minneapolis. However, the discrepancy between the prescribed rates and the findings of the state study has fueled debate over the ordinance’s effectiveness.

Minneapolis’ decision comes amid a nationwide conversation about gig workers’ rights and fair compensation. Other cities and states have grappled with similar legislation aimed at regulating the gig economy, with varying degrees of success and opposition from industry players.

In Minnesota, last year’s attempt to pass a minimum wage bill for rideshare drivers was vetoed by Governor Tim Walz, who cited concerns about the state’s competitiveness in the rideshare market.

The impending departure of Lyft and Uber from Minneapolis underscores the challenges of regulating the gig economy while balancing the interests of drivers, companies, and consumers.