This week, state legislators found themselves in a familiar position. Once again, lawmakers have proposed rideshare minimum wage legislation that has prompted Uber and Lyft to threaten to leave. Only a month ago, the companies were on the brink of fulfilling a threat to leave Minneapolis (or the entire seven-county metro in Uber’s case) after the city council passed its own rideshare ordinance. Now, the companies are threatening to leave the entire state – again.
With the legislative session coming to an end soon, the clock is ticking. There are some major moves that could still come in the next two weeks. Here’s a look at what scenarios could lead to Uber and Lyft’s departure, and what would entice the companies to stay:
The scenario where Uber and Lyft leave
The crux of the issue comes down to driver compensation rates. State leaders are proposing a minimum $1.27 per mile and 49 cents per minute rate with a $5 minimum ride requirement. If this rate passes, Minneapolis City Council members have agreed to reduce their ordinance’s per mile-rate by 13 cents to match the state’s rate.
This rate was reached as a compromise in negotiations between city and state lawmakers. But these negotiations did not include Uber and Lyft. The companies say this rate is still too high and will raise ride rates above what many riders are willing to pay, hurting drivers and riders alike.
If the state keeps the rate as it is currently proposed, the companies say they will leave. Even if the rate is lowered to a compromise Uber and Lyft agree to, a question remains over what will happen in Minneapolis.
And that’s where one more catch comes into play. It’s pretty clear many lawmakers do not want to worry about city governments setting rates that could prompt these companies to threaten to leave major metro areas now or in the future.
House Majority Leader Jamie Long, DFL-Minneapolis, one of lead negotiators working with the state House, Senate and governor on a rideshare bill, has said he wants to avoid preemption. However, GOP legislators have attempted to add legislation that would restrict lower governments’ ability to set their own minimums on rideshare rates.
If Minneapolis forges forward with its ordinance’s current proposed rates, Uber and Lyft say they will pull out by July 1.
The scenario where Uber and Lyft stay
Long has also said he believes Uber and Lyft are bluffing and will not actually pull out of Minnesota.
However, assuming that the companies are not bluffing, Lyft has, though begrudgingly, said it would agree to a wage increase to 89 cents per minute and 49 cents per mile. This was the lowest rate suggested in a state study released in March, one day after Minneapolis passed its own rideshare ordinance that would mandate $1.40 per hour and 61 cents per minute, a number based off of 2019 Seattle rideshare drivers earnings.
Uber seems to be looking for a far lower rate. During a Tuesday hearing for the bill in the House Labor and Industry Finance Committee, Joel Carlson, a Minnesota lobbyist working for Uber, said Uber wants 41 cents per mile and 61 cents per minute.
So, in order for at least one of the companies to stop threatening to leave the state, it seems that legislation would have to require no more than 89 cents per mile.
Meanwhile, Gov. Tim Walz also hasn’t shown approval for this week’s proposed legislation. The governor said he will remain committed to raising wages for drivers while still ensuring Uber and Lyft do not leave the state.
He hasn’t indicated what he might do if the current rideshare bill passes. However, he has already vetoed a rideshare bill once before. He blocked a similar bill last year, stating the measure “could make Minnesota one of the most expensive states in the country for rideshare” and that “increased rideshare rates will limit, and potentially eliminate, needed transportation options for vulnerable communities.”
After vetoing the 2023 bill, the governor put together a work group to help lawmakers craft a new bill to support higher pay for workers.
So if rideshare minimum rates don’t pass 89 cents per mile or a higher rate bill is vetoed, then at least Lyft would likely stay.
However, that doesn’t account for the city of Minneapolis. Unless the Legislature passes a compromise suitable to a majority of the Minneapolis City Council or votes to preempt the council from legislating over rates, the council may forge forward with its ordinance exceeding rates Uber and Lyft find acceptable. Then the company’s threat will go back to the city level.
If this happens, Uber and Lyft might stay if the city also lowers its rates outlined in its ordinance. Or maybe Long is right and the companies are bluffing. If the companies ultimately do pull out, officials are looking to new local alternatives to fill the gap.
Winter Keefer
Winter Keefer is MinnPost’s Metro reporter. Follow her on Twitter or email her at wkeefer@minnpost.com.
