MINNEAPOLIS — Rideshare giant Lyft has started sending communications to its drivers and customers in the Twin Cities area that the company will cease operations in Minneapolis on May 1, after the Minneapolis City Council voted to override Mayor Jacob Frey's veto of a rideshare pay ordinance.
In an email to drivers, titled "We're leaving Minneapolis," Lyft claims the ordinance "would make rides on the Lyft platform unaffordable for the majority of Minneapolis residents," adding that drivers would ultimately earn less while creating an "unsustainable situation" for riders.
"As a result, starting May 1, Lyft will be forced to stop offering rides in Minneapolis and you will no longer be able to give rides with Lyft that start or end in the city," the email to drivers said.
A similarly worded email is being sent to Minneapolis area users of the Lyft app who book rides on the platform.
Uber has also said it will cease operations in the entire metro area starting May 1, including MSP International Airport.
“We are disappointed the Council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded," said Josh Gold, senior director of public affairs at Uber, in a statement. "But we know that by working together with all stakeholders - drivers, riders and state leaders - we can achieve comprehensive statewide legislation that guarantees drivers a fair minimum wage, protects their independence and keeps rideshare affordable.”
"I don't believe they will leave."
Joe Pierce, a YouTube contributor for The Ride Share Guy, which helps drivers navigate industry changes nationwide, is also a local driver for Uber and Lyft with 10 years experience. He still believes the companies will find a way to cut a deal that raises wages without leaving town.
"This is a problem for them and they need to make it work here in Minnesota," he said. "Driver rates have been far too low for far too long."
The city ordinance requires Transportation Network Companies (TNC) like Uber and Lyft to pay rates of $1.40 per mile and 51 cents per minute, which the council majority concluded would raise driver pay to meet the city's minimum wage after factoring expenses.
Frey vetoed the ordinance when it was first passed, expressing frustration with the council for scheduling the vote just one day before the release of a report from the Minnesota Department of Labor and Industry studying pay rates for rideshare drivers.
That report, which studied driver pay in 2022, featured lower estimates. It found drivers would need 89 center per mile and 49 cents per minute in order to make the city's minimum wage after factoring vehicle and tax expenses.
If factoring in other benefits, such as health insurance and unemployment, the authors estimate that drivers in the Twin Cities would need $1.20 per mile, which is still 20 cents short of the city ordinance. Pierce believes he knows why there is such a disparity.
"The state study focused on 2022," he said. "2022 was probably, in my 10 years, my best earning year for Uber and Lyft because they were trying to come out of the pandemic. They were trying to get drivers to get out on the road, they were offering a lot of bonuses so the earnings report, in my opinion, is skewed. This year is drastically different than 2022."
Although Pierce would prefer the rate approved by the council, which voted 10-3 on Thursday to override the veto, he believes the rate rate will fall - along with the threats to leave - by the time May 1st comes around.
"My opinion, I think the state will possibly pre-empt the city and negotiate with the companies directly," he said. "However that negotiation process goes, I think both sides will come to the table and figure out something amicable."
He points out that both companies did leave the door open to a state deal in their most recent statements.
Kent Erdahl: "You think customer's should be prepared, regardless, be prepared to maybe be paying more."
Pierce: "Yes. Do I think it will be a drastic change? No. Do I think it could be anywhere from like a 10-20% hike on rates? Yes."
Rideshare companies have long said increases would be closer to 40%, assuming they stick around to find out.
Erdahl: "If this all falls apart and May 1st comes, nothing changes, and Uber and Lyft follow through, even temporarily. What will you do?"
Pierce: "I'm not really sure, honestly. I drive about 15-20 hours a week. Lyft and Uber have been the only players in the entire country for basically my entire decade of driving. I feel there should be more options, and a market like ours, with the situation we're going through, this would be the opportune time for other companies to come in."
Pierce said he has checked out two smaller startups, Wridz and Empower, which are both eyeing possible expansions into the twin cities right now.
Efforts are also apparently underway to launch a local startup, but Pierce - along with Mayor Frey - say the wouldn't count on licensing and other logistics being worked out in time to avoid a noticeable disruption.
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