Ride-sharing giants Uber and Lyft will stay in Minnesota because the state’s legislature agreed to reduced minimum pay standards.
The companies threatened to leave the state after the Minneapolis City Council passed an ordinance mandating a higher minimum wage for drivers. The two sides fought for a year.
“We have reached an agreement with Uber and Lyft that we will set a state-wide rate that will be $1.28 per mile and 31 cents per minute,” boasted DFL House Majority Leader Jamie Long.
Both companies would have left the state on July 1.
From The Star Tribune:
The agreement supersedes a recent ordinance from the Minneapolis City Council on pay standards and sets minimum rates statewide at $1.28 per mile and 31 cents per minute. If the bill becomes law, the new rates would take effect Jan. 1.Although the pay rates in the bill were lower than the drivers wanted, they were happy to see a deal come together, said Marianna Brown, vice president of the Minnesota Uber/Lyft Drivers Association.
The ordinance would have required the companies to pay drivers $1.40 per mile and 51 cents per minute.
The companies countered with 89 cents per mile and 49 cents per minute.
The legislation came back with $1.27 per mile and 49 cents per minute.
When the legislature rebuffed the counter, Uber and Lyft threatened to leave Minnesota.
Uber and Lyft again said no.
But they agreed to the $1.28 per mile and 31 cents per minute.
“We have long supported a minimum earnings standard and increasing driver pay in smart, deliberate ways, which is why earlier this year we announced a new commitment where drivers will always make at least 70% of the weekly rider fares after external fees,” stated Lyft. “This legislation builds on those efforts and marks an important compromise that allows Minnesota rideshare drivers to keep earning with Lyft. Through direct engagement with all stakeholders, we have found enough common ground to balance a new pay increase for drivers with what riders can afford to pay and preserve the service. We look forward to continuing to serve both riders and drivers across the state for the foreseeable future.”
Uber released a statement that showed the company isn’t that pleased with the resolution:
“We applaud the tens of thousands of riders & drivers who sent close to 100,000 emails to legislators – your voices were heard. While the coming price increases may hurt riders and drivers alike, we will be able to continue to operate across the State under the compromise brokered by the Governor.”
The companies shouldn’t have threatened to leave Minnesota. The lawmakers called their bluff. Now, the rates apply to all Minnesota drivers, not just the Minneapolis drivers.
The companies even had facts on their side (emphasis mine):
A recent study commissioned by the Minnesota Department of Labor and Industry found that, after factoring in expenses, 50% of Uber and Lyft drivers in the Twin Cities metro area earned $13.63 per hour or less while driving. In the rest of Minnesota, 50% of Uber and Lyft drivers earned $8.12 per hour or less.Supporters of the original Minneapolis measure had said the city’s rate would ensure that companies pay drivers the equivalent of the city’s minimum wage of $15.57 per hour. However, the study found that a lower rate of $0.89 per mile and $0.49 per minute would meet the $15.57 per hour goal.
I wonder how many states will follow now that they know Uber and Lyft could cave.
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