Ridesharing Giants Halt Operations in Minneapolis Due to New Minimum Wage Law

Lyft and Uber, two of the largest ridesharing companies, announced they will cease operations in Minneapolis starting May 1st. This drastic measure comes in response to the city council’s recent decision to pass a new minimum wage law for drivers working with the transportation platforms. The ordinance establishes a minimum hourly rate of $15.57, matching the city’s general minimum wage.

Both Lyft and Uber strongly opposed the minimum wage law, arguing it does not account for costs of doing business and would force them to significantly increase prices for riders. A study commissioned by the mayor found drivers should be paid around $0.89 per mile and $0.49 per minute to earn minimum wage based on expenses. However, the city council voted to override the mayor’s veto, disregarding this analysis.

What Does This Mean For Drivers And Riders?

With Lyft and Uber pulling out, it remains unclear what this will mean for the thousands of drivers who rely on the platforms for income. There are also concerns about access to affordable transportation for riders throughout Minneapolis. The mayor is urging the city council to find a compromise and engage in further discussion using data and analysis before the May 1st deadline.

This ongoing debate highlights challenges that have arisen in many cities between those advocating for better pay and job protections for gig workers, and companies seeking to maintain contractors classification of drivers. Only time will tell if Minneapolis can broker an agreement to keep ridesharing available while also addressing drivers’ minimum wage concerns.