## Higher Pay for Uber and Lyft Drivers in Minnesota
Uber and Lyft drivers in Minnesota are set to receive higher pay, thanks to a new law that has been agreed upon by the state and the two ride-hailing giants. The deal, which is expected to be signed by Governor Tim Walz, will provide some protections for drivers while also placing limits on state government.
Starting from January 1, 2025, drivers will be entitled to earn at least $1.28 per mile and $0.31 per minute. These rates align with recommendations from a state study on driver compensation, which suggested rates between $0.89 and $1.207 per mile and $0.487 per minute.
While this new law brings an end to a months-long saga during which Uber and Lyft threatened to leave the state multiple times, it does not resolve the ongoing debate over who should set wages for gig economy workers. Instead, it presents a compromise that offers some benefits to everyone involved, except perhaps the riders.
Uber’s senior director of public policy, Josh Gold, expressed the company’s satisfaction with continuing operations in Minnesota and acknowledged that the deal provides some pricing flexibility. However, he also mentioned that Uber still considers the rates to be too high.
Gold’s statement raises concerns that riders and drivers will feel the impact of increased rates, leading to a decrease in demand. While this argument is not entirely baseless, it fails to acknowledge the benefits of higher pay and other protections outlined in the bill, such as vehicle insurance and compensation for on-the-job injuries.
These protections come at a cost, as seen in New York City where Uber and Lyft are required to contribute to the Black Car Fund, which provides drivers with worker’s compensation. The 2.75% levy on each fare is ultimately borne by the riders.
The fear of increased costs for riders was a key factor in Governor Walz vetoing a previous version of the bill. He believed that it would make Minnesota one of the most expensive states for ride-hailing services.
However, some local politicians are unhappy with the new law because it preempts Minneapolis and other cities from enacting their own wage floors. Minneapolis, where 95% of all taxi and ride-hail trips occur, had previously passed an ordinance guaranteeing drivers a minimum rate of $1.40 per mile and $0.51 per minute. Uber and Lyft opposed this bill, claiming that it would make operating in the city too expensive.
The involvement of the Minnesota legislature came about after Uber and Lyft threatened to leave the city by May 1, 2024. They expressed a willingness to stay if the state government intervened, which it ultimately did.
Critics of the new law argue that it undermines local control and is a tactic used by corporations to exert their influence. Minneapolis Council vice president Aisha Chughtai expressed her disapproval, stating that it is “gross” to see Governor Walz cave to multibillion-dollar corporations.
In 2023, Uber and Lyft collectively spent $220,000 on lobbying in Minnesota, as reported by state lobbying records. This demonstrates the extent to which they were invested in the outcome of the legislation.
This agreement in Minnesota comes at a time when the gig worker fight is also unfolding in California. The California Supreme Court is set to hear arguments on the constitutionality of Proposition 22, a 2020 law that classified drivers as independent contractors rather than employees.
The outcomes of both legal processes will have significant implications for how ride-hail companies operate nationwide. They will determine the pay and protections drivers can expect and whether rider fares will increase.