For months the ride service apps Uber and Lyft have been fighting attempts by the government of Minneapolis, Minnesota to raise driver pay to the city’s $15.57 per hour minimum wage, even threatening to leave the city should they be forced to do so. Lyft, however, is now signaling that it’s willing to compromise rather than cut off service.
“We are asking the City Council to work with us,” Lyft Chief Policy Officer Jeremy Bird wrote in a letter to the city council, according to KARE-11, the local ABC affiliate. He suggested that Lyft told the city council that it would be willing to pay a time-and-mileage-based wage suggested by a state government study that the company believed would raise driver earnings by 17%. The study, commissioned after the governor vetoed a similar minimum wage bill from the Minneapolis legislature. The study found that the median driver pay in Minneapolis and nearby St. Paul was $13.63 after expenses.
“The analysis of company data indicates that gross hourly earnings per passenger time (P3) for drivers in the seven-county Twin Cities metro area averaged $52.94 in 2022,” the report says. “But drivers had a passenger in the car only 58 percent of the time they were logged into the app and available for a dispatch.” Factor in time spent waiting for a hail, plus the cost of maintaining a vehicle, and those earnings go way down. The government also found that drivers in the state were three times more likely than other Minnesota workers overall to require assistance like food stamps or Medicaid insurance coverage.
In August, the Minneapolis city council voted to establish a $15-an-hour minimum wage for the app’s drivers, who have long complained that their share of customer fares is too small — even as those fares have increased. Uber and Lyft have fought government regulation for pretty much their entire existences, and stopping operations rather than comply with government edicts is a frequent tactic. The bet is that politicians would rather cede control of their streets to the companies rather than risk the ire of constituents who would miss the companies’ services.
When Minneapolis’s city council overrode the mayor’s veto of the pay ordinance in March, the two companies said they would exit the city by May 1. Since then, Minneapolis has said that it would fund grants to businesses developing alternatives to the apps, and drivers said they might establish their own app.
“We understand that the ordinance was intended to improve driver earnings, an area of serious focus for Lyft as well,” Lyft’s Bird wrote in his letter.