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Uber and Lyft leaving Minneapolis a bluff?
On May 1, Uber and Lyft are threatening to abandon Minneapolis after the city passed an ordinance to give minimum wage to drivers. But is it a bluff?
MINNEAPOLIS (FOX 9) - Uber and Lyft say they will exit the Twin Cities market on May 1 after the Minneapolis City Council voted to guarantee a minimum wage for rideshare drivers on Thursday.
Minneapolis is not the first American city to pass an ordinance like this. In 2020, Seattle passed the Fare Share ordinance – which set minimum compensation for drivers and was used as a roadmap for the Minneapolis proposal.
In Seattle, the rideshare companies remained in the market but claimed it resulted in a drop in ridership as fares increased. Driver advocates dispute that claim.
"Demand did not collapse," said Sergio Avedian, a senior contributor at The Ride Share Guy. "We would have known by now if this thing wasn’t working. Demand was not crushed. Everyone is still doing rideshare in Seattle."
In 2016, Uber and Lyft left the Austin, Texas, market after the city passed an ordinance requiring all drivers to be fingerprinted. While a lot has changed in the rideshare landscape since 2016, it's worth noting that in that scenario, other rideshare companies filled the void, and Uber and Lyft eventually returned.
Avedian calls the rideshare company’s bluff on their threat to leave, saying he believes stakeholders will come to the table and reach a compromise before the law takes effect on May 1.
But Minneapolis business leaders say they have no reason to believe Uber and Lyft won’t follow through with their promise to leave if the requirement isn’t reversed.
"My concern is an immediate one. What’s going to happen in the first weeks and months," said Adam Duininick of the Minneapolis Downtown Council. "You can pay people all you want but if Uber and Lyft leave, nothing is going to be magically re-created."
Mayor Jacob Frey has promised to veto the bill.
Uber will leave Minneapolis, neighboring communities on May 1
In a statement on Thursday, Uber said it would leave Minneapolis and neighboring communities on May 1 if the ordinance takes effect.
"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 company said in a statement.
Uber also said, "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. 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 says it'll leave Minneapolis on May 1
Lyft released a statement after the Minneapolis City Council approved the ordinance, saying the company 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 (following the amended implementation date)."
"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. 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. Otherwise, we will no longer be able to operate in the city once the bill takes effect on May 1," the company's statement says.