Facing the prospect of Uber and Lyft abandoning their city in a few weeks, Minneapolis’s city council voted unanimously on Thursday to push back the implementation of a new rideshare pay policy by two months.
But the far-left council rejected a proposal to rescind the controversial ordinance that has led to concerns among many residents who rely on the rideshare giants to get to their jobs and medical appointments. And the council refused to lower mandated driver pay rates to a level that a state study found would ensure drivers earn at least minimum wage.
The decision to delay the implementation of the city’s rideshare pay rules from May 1 to July 1 was intended to buy time for the Minnesota legislature to implement a statewide policy that could override the city’s ordinance and for upstart rideshare companies looking to replace Uber and Lyft to enter the market.
At least four small rideshare companies have applied to operate in the city, councilwoman Aurin Chowdhury said. “They’re in the process of completing those applications and getting licensed, and that takes time,” she said.
Opponents of the council’s decision to jack up mandated pay rates for rideshare drivers with little local data and no real fallback plan also agreed to push back the implementation date. But councilwoman LaTrisha Vetaw said pushing it back was not a solution.
Vetaw said her constituents have been living with “fear and anxiety” over whether they’ll be able to get to work or pick up their children from school, and called on her colleagues to find the “courage” to fix the policy.
“In this work, we all need to be willing to admit when we get things wrong,” she said. “I think this is just a bad policy and we need to go back and fix it.”
But, she added, “I am doubtful that that’s going to happen.”
She also criticized the council for passing its policy a day before a state study was released on rideshare-driver pay. “If you make these kinds of decisions without facts, we’re no better than Donald Trump,” she said. “Whoa, Donald Trump,” replied councilman Michael Rainville.
In early March both Uber and Lyft threatened to leave Minneapolis by May 1, after the council upped driver-pay requirements to $1.40 per mile and 51 cents per minute. Councilmembers said it was necessary to ensure drivers earned the equivalent of Minneapolis’s $15.57 minimum wage. But they determined the new pay rates without getting local data from Uber and Lyft and they didn’t invite company leaders to engage in their process.
They also didn’t wait for the release of a state labor study on the matter. A day after the council jacked up pay requirements, the state study was released that found that drivers could earn the equivalent of the minimum wage if they are paid 89 cents per mile and 49 cents per minute, far below the council’s rates. Upping that to $1.21 per mile and 49 cents per minute could afford the drivers benefits, including paid leave and health insurance.
In light of Thursday’s vote, both Uber and Lyft have agreed to remain operating in Minneapolis until at least July. But in a statement to National Review, Lyft said the pay mandates still need to come down. “The fundamental facts remain the same: this ordinance will make rides too expensive for most riders, meaning drivers will ultimately earn less. This is unsustainable for our customers and would force us to shut down operations in Minneapolis when the ordinance does inevitably take effect,” Lyft said in an email.
After the council agreed to push back the implementation of the rideshare pay ordinance, councilwoman Linea Palmisano proposed rescinding it completely.
“This ordinance started with a good intent to ensure that every rideshare driver earned the city-mandated minimum wage. But it is now so tainted with negative public opinion and outcry that I find it unsalvageable,” Palmisano said, adding that her constituents are “upset, angry, frustrated, and downright despondent over this ordinance.”
She said there have already been negative effects: some drivers who had financed their vehicles have had them recalled, and one of her constituents who is nearing completion of a college degree is losing tuition assistance from one of the companies.
“These aren’t hypotheticals,” she said. “They’re already happening.”
Palmisano also pushed back on the idea that small, upstart rideshare companies could take Uber’s and Lyft’s place anytime soon, calling it a “fantasy.”
“The void of 400,000 rides per week in the metro area is not going to be accounted for in even two more months,” she said. “Minneapolis going it alone and damaging itself, the metro area, and the rest of the state has proven to be a folly.”
“I am here to say, let’s start over,” Palmisano said.
Her proposal was rejected in a 10-3 vote. Another proposal to lower the city’s pay rates to $1.21 per mile and 51 cents per minute—in line with the higher levels noted in the state labor report—also failed in a 10-3 vote.
“I have no interest in changing these rates based on corporate pressure,” said councilwoman Robin Wonsley, one of the loudest proponents of the city’s higher rates. She said the policy wasn’t done is “a haste,” but was a result of two years of work.
“We did not go into this foolishly,” she insisted. “We went into this thoughtfully.”
Wonsley had previously proposed spending $150,000 in city money to help seed small, upstart rideshare companies looking to replace Uber and Lyft. She pulled that proposal earlier in the week, determining that the city’s existing small-business assistance programs sufficed.
In its statement to National Review, Lyft said it is willing to support a pay rate of 89 cents per mile and about 49 cents per mile, as noted in the state’s labor study. That would “increase current driver earnings by 17% while allowing us to continue to operate within the city,” the company said in an email.
During Thursday’s meeting, Wonsley called the rideshare giants “extremely exploitive.” Councilman Jason Chavez agreed, saying the council wouldn’t allow the companies to take advantage of immigrant and minority drivers.
“The hostage situation that we have by them continuing to threaten leaving our city and continue exploiting our workers with temper tantrums is unacceptable,” he said.