Uber and Lyft Threaten to Stop Minneapolis Operations Due to New Minimum Wage Law

Quincy Jon, Tech Times 18 August 2023, 01:08 pm

Minneapolis' city council has adopted a new minimum wage policy that has caused Uber and Lyft to disagree and threaten to leave the city.

In the tense atmosphere of a 7-5 vote, the Minneapolis City Council passed an ordinance to enhance worker protections for rideshare drivers, MPR News reported. This legislation, however, has quickly escalated into a showdown between the city's administration, rideshare companies, and the broader gig economy landscape.

Lyft, Uber Claims Negative Impact of New Minimum Wage Rule

Under the newly adopted regulation, rideshare drivers within Minneapolis would receive a minimum of $1.40 per mile and $0.51 per minute for their services. The measure's intent aligns with the growing national trend of gig workers advocating for fair wages and better job benefits. However, state and city governments have faced significant resistance to regulating the gig economy.

Lyft warned that if the proposal becomes law, it will be forced to cease operations within Minneapolis beginning January 1, 2024, as per a report from CBS News. The company argued that the proposed rule would negatively affect drivers, as increased pricing could result in only the affluent affording rides.

Similarly, Uber took a firm stance against the ordinance, emphasizing that it could substantially limit its platform's ability to maintain rider safety. The company issued a message to its drivers, urging them to reach out to the mayor and city council to oppose the legislation.

In contrast to these threats, there have been instances where similar legislation has been successfully implemented without causing disruptions to rideshare services. One example is rideshare drivers in Seattle, who underwent a comparable process a few years ago, resulting in improved pay and protections.

It's a Complicated Scenario

Minneapolis Mayor Jacob Frey, while supportive of the idea of drivers receiving better pay, expressed concerns about the complexity of the issue and the need for further information. He has the authority to veto the ordinance until August 23, a decision that could potentially prevent its implementation.

In a communication addressed to council members ahead of the vote, Mayor Frey conveyed his reservations regarding drivers' working conditions. He emphasized the necessity to allow additional time for thoughtful consideration, according to CNN.

Frey appealed to the council to extend the ordinance's effective date until after the upcoming legislative session. A state working group has been responsible for proposing legislative recommendations on this matter by January. Rideshare drivers had urged the council to take action following the veto of a similar state-level bill by Governor Tim Walz.

During the deliberations, Council Member Robin Wonsley contended that the city's administrative team is ready to initiate the policy as of January, asserting that any delay would be unnecessary.

The Minneapolis City Council's decision comes at a time when the gig economy and the status of gig workers are subjects of intense debate. The city council's efforts to enforce higher pay and increased workplace protections for rideshare drivers reflect broader nationwide discussions surrounding gig economy regulations and the evolving nature of work in the digital age.