The future of Uber and Lyft in Minneapolis is still undecided following the City Council’s resolution last month to mandate that ride-sharing companies pay drivers a higher rate within city limits.
Uber and Lyft have indicated they would discontinue service to the Minneapolis metropolitan area on May 1, prompting the city to reconsider the ordinance.
In addition, the state may intervene.
The possibility that Uber and Lyft will leave the Minneapolis metropolitan area has reportedly “deeply concerned” Minnesota Gov. Tim Walz, a Democrat.
Mr. Walz noted that the change would affect everyone who relies on the service, including students, individuals with disabilities, and those attempting to return home safely while intoxicated.
Legislation enacted by state legislators potentially could take precedence over the local ordinance. The most effective course of action, according to Mr. Walz, is to request that the Minneapolis City Council negotiate a compromise.
The City Council overcame a mayoral veto and passed the ordinance, which mandates that ride-hailing companies compensate drivers at a rate of $1.40 per mile and $0.51 per minute, or $5 per ride, whichever is greater, excluding tips.
According to proponents, the rate ensures that employers compensate drivers at least $15.57 per hour, which is the city’s minimum wage.
“Drivers are human beings with families, and they deserve dignified minimum wages like all other workers,” Councilman Jamal Osman, who co-authored the ordinance, said.
“The Minneapolis City Council will not allow the East African community, or any community, to be exploited for cheap labor.”
A significant number of East African immigrants operate as Lyft and Uber drivers in the Minneapolis area and have been vocal in supporting the updated pay.
However, a recent study commissioned by the Minnesota Department of Labor and Industry showed that the $15.57 per hour target could be met with a reduced rate of $0.89 per mile and $0.49 per minute.
Uber and Lyft have stated that they would support the study’s rate but would exit the market if the Minneapolis ordinance is implemented.
With a population of more than 3 million, the metropolitan area comprises more than half of the state’s residents.
Uber intends to cease operations in Minneapolis, St. Paul, and the Twin Cities metropolitan area, including Minneapolis-Saint Paul International Airport, according to Uber spokesperson Josh Gold.
A Lyft spokesperson, CJ Macklin, stated that the company will cease operations exclusively in Minneapolis. While Lyft will continue to provide airport service, it will cease passenger pickup and drop-off in the city.
In 2016, both Uber and Lyft withdrew from Austin, Texas, in response to the city initiative to implement fingerprint-based background checks on drivers as a safety precaution for passengers.
The companies returned after the Texas Legislature overturned the local measure by enacting a law that enforced distinct regulations throughout the state.
Annual rate adjustments for inflation also would have been mandated.
