Uber and Lyft drivers in Minnesota will get higher wages thanks to an agreement between the state and the nation’s two largest ride-hailing companies. The result: new law which provides certain protections to drivers while placing limits on state government.
The bill, which Governor Tim Walsh has publicly supported and is expected to sign, states that starting Jan. 1, 2025, drivers will be entitled to earn at least $1.28 per mile and $0.31 per minute. These percentages somewhat align with what a state study on recommended driver compensation: between $0.89 and $1.207 per mile and $0.487 per minute.
While the new bill ends a months-long saga in which Uber and Lyft have threatened to leave the state multiple times, it is unlikely to end arguments over who should set wages for gig economy workers. Nor does it give victory to any party. Instead, this web of compromises outlined in the bill gives a little to everyone — except perhaps the rider.
Josh Gold, Uber’s senior director of public policy, told TechCrunch that while the company is happy to continue operating in Minnesota and the deal gives it some pricing flexibility, Uber still considers the rates too high.
“Riders and drivers will feel the price increase and the decrease in demand that comes from that,” Gold said.
Uber and Lyft have long used this lose-lose scenario to oppose raising wages or adding other protections. The companies’ proposal isn’t wrong — though it ignores the benefits of raising wages and the value of other protections outlined in the bill, such as vehicle insurance and compensation for on-the-job injuries.
These very protections must be paid for somehow. In New York, where Uber and Lyft are required to contribute to the Black Car Fund, which provides drivers with workers’ compensation, the 2.75% levy on each fare comes out of the rider’s pocket.
The threat of higher ridership costs is the main reason Governor Walz vetoed an earlier version of the bill. Walz claimed at the time that it would make Minnesota one of the most expensive states to drive.
Some local politicians are unhappy with Minnesota’s new law because it also prejudices Minneapolis — where 95 percent of all taxi and cab trips, according to the state Department of Labor and Industry — and other cities from enacting their own minimum wages.
In March, the Minneapolis City Council passed an ordinance guaranteeing that drivers earn a minimum rate of $1.40 per mile and $0.51 per minute. Uber and Lyft opposed the bill, saying it would make it too expensive to operate in the city. They threatened to leave by May 1, 2024, but then backed out, saying they would consider staying if the Minnesota Legislature got involved. Which happened.
“Any attempt to undermine local control is bad,” said Minneapolis Council Vice President Aisha Chughtai. in X. “It’s a Republican and corporate tactic used across the country. To see our Governor Tim Walsh coming into contact with multi-billion dollar corporations insisting on catching up with Minneapolis is gross.”
In 2023, Uber and Lyft collectively spent $220,000 to lobby in Minnesota, according to government pressure records.
The deal in the Minnesota Legislature comes as the gig workers’ fight continues in California. The California Supreme Court will hear arguments on Tuesday at constitutionality of proposition 22the 2020 law that classified drivers as independent contractors rather than employees.
The results of both legal proceedings will have implications for how ride-hailing companies operate across the country, what kind of pay and protection drivers can expect, and how much rider fares are expected to rise.
