Uber, Lyft threaten to stop operations in Minneapolis if mandatory driver raises become law

Uber and Lyft are threatening to shut down operations in Minneapolis, Minnesota, on May 1 if a proposed driver raise ordinance becomes law, Fox Business reported.

The Minneapolis City Council approved the rideshare ordinance on Thursday by a 9-4 vote. Minneapolis Democratic Mayor Jacob Frey vetoed the measure on Friday over concerns that Uber and Lyft would leave the city.

Frey has been pushing city council members to hold off on approving the ordinance until a state study from the Minnesota Department of Labor and Industry is completed or to lower the driver raises to rates acceptable to the rideshare companies.

"I've been telling the council for six months now to wait for the data to come out," Frey stated, according to the Star Tribune.

The state's study, ordered by Democratic Governor Tim Walz, found that rideshare drivers earn an average of 48.7 cents per minute and 89 cents per mile in the Twin Cities metro area. Drivers operating in the Greater Minnesota region earn 42.7 cents per minute and $1.116 per mile.

Uber called the report "deeply flawed" but noted that "it clearly recognizes that drivers are independent contractors," KARE reported.

"With the State and, most importantly, drivers agreeing that flexibility is critical, any compromise must prioritize independent contractor status," an Uber spokesperson said.

The spokesperson claimed the "Minneapolis minimum wage proposal is off by a whopping 60%."

Lyft called the state's report "nonsensical."

"The only part of this report that is grounded in reasonable data is its conclusion that Minnesota rideshare drivers earn more than $52 per hour of giving rides," a Lyft spokesperson remarked. "This study is dishonest, counterproductive, and a disservice to the goal of meaningful policymaking."

If the ordinance is passed into law, rideshare drivers would make at least $5 per ride and receive 80% of canceled rides.

Lyft claims that the pay hike would nearly double rates for passengers. The company urged customers to sign a petition opposing the ordinance.

The city council currently has the votes to override the mayor's veto and pass the measure into law. If Frey can convince one council member to switch his or her vote, his veto could not be repealed.

Council member Jason Chavez, who voted to secure driver raises, stated, "Small businesses are required to pay minimum wage before tips, and it's clear that multibillion-dollar out-of-state tech companies should be too."

"No company should be above the law. Relying on low-income riders to subsidize Uber and Lyft paying drivers' wages is an economic and racial injustice," Chavez added.

A recent statement from Uber read, "Uber supports comprehensive statewide legislation that guarantees drivers $35/hr minimum earnings while working and protects their flexibility and independence. If this ordinance is enacted, we look forward to working with drivers, riders and the legislature to bring rideshare back."

"The [City Council] hijacked a state process that proposed real solutions and is in the process of analyzing data to inform a workable earnings standard," Uber continued. "The state's task force made a series of recommendations that should be legislated and collected real data to come up with an appropriate minimum earnings standard."

Lyft noted that it is "committed to working with any stakeholders on a more sustainable and thoughtful policy solution, but if this particular proposal becomes law, it will force Lyft to cease operations in the City on May 1."

"We support a minimum earnings standard for drivers, but it must be done in a way that allows the service to sustainably and affordably operate for riders. For the second time in less than a year, the bill sponsors have willfully chosen to ignore offers to collaborate, instead choosing to rush through the most extreme figures possible," Lyft added. "We implore Mayor Frey to veto this legislation and instead join our efforts to pass a statewide minimum earnings standard that can balance the needs of all."

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