Minneapolis delays minimum wage increase for rideshare drivers after Uber, Lyft threaten to leave

Originally scheduled to take effect on May 1, the policy approved by the Minneapolis City Council will require Uber and Lyft to pay their drivers either $1.40 per mile and $0.51 per minute or $5 per ride, ensuring they receive the same hourly wage as the city minimum of $15.57.

In response to the initial announcement, Uber and Lyft expressed concerns over the potential increase in labor costs, warning that it could make rides too expensive for most riders and ultimately lead to decreased earnings for drivers. The companies then threatened to cease its services entirely from the city if the policy were to go into effect.

With the effective date pushed back to July 1, there is now an opportunity for the city to negotiate with the rideshare companies in a way that can prevent them from stopping services.

Uber welcomed the council's decision, stating to CNN that it, “paves the way for all stakeholders to work with [Minnesota] leaders on a statewide solution that raises pay at the state level, protects flexibility, and keeps rides affordable.”

Similarly, Lyft expressed a willingness to support a compromise, citing a recommended pay rate from a Minnesota Department of Labor and Industry study. The company said it was “willing to support the Minnesota Department of Labor and Industry study’s recommended $0.89 per mile and $0.487 per minute rates, which would increase current driver earnings by 17% while allowing us to continue to operate within the city.”

However, the company emphasized the challenge posed by the rising costs, stating that the ordinance, as initially proposed, would make rides too expensive for most riders and could force them to shut down operations in Minneapolis.

“The fundamental facts remain the same: this ordinance will make rides too expensive for most riders, meaning drivers will ultimately earn less. This is unsustainable for our customers and would force us to shut down operations in Minneapolis when the ordinance does inevitably take effect,” Lyft said in a statement to the New York Post.