Uber, Lyft to Cease Operations in Minneapolis After City Council Mandates Higher Wages for Drivers

After the Minneapolis City Council decided Thursday, March 14, to force ride-hailing companies to pay their drivers a local minimum wage of at least $15.57 per hour after overriding the mayor's veto, Lyft and Uber announced that they would pull out of the city's market.

Exiting the Market

According to The Associated Press, Lyft criticized the council's policy as "deeply flawed," adding that the company backs a minimum wage for drivers but disagrees with the one they approved.

"This ordinance makes our operations unsustainable, and as a result, we are shutting down operations in Minneapolis when the law takes effect on May 1."

Uber also published a statement that day stating that it would likewise suspend operations. As anticipated, the ordinance will be implemented and put into force on May 1.

Lyft and Uber will exit the Minneapolis market after the City Council orders them to pay their drivers at least $15.57 per hour. (Photo: Scott Olson / Getty Images)

'Workers Over Corporate Greed'

On Thursday, the state House Republicans introduced a measure to bypass municipal laws of ride-hailing services. Both firms have pledged to advocate for statewide legislation to challenge the Minneapolis rule.

Last week, the proposal was enacted by the City Council with a 9-4 vote, even though Mayor Jacob Frey had promised to reject it.

The law requires a minimum wage of $1.40 per mile plus $0.51 per minute for each minute a driver spends carrying a passenger, or $5 per trip (whichever is greater), for ride-hailing services. That just covers the part of a multi-city journey that happens in Minneapolis.

Those who oppose the measure argue that the impending price increases would affect everyone, particularly those with disabilities and low incomes who depend on ride-hailing services.

Proponents of the services assert that drivers, who are disproportionately immigrants and people of color, have been exploited for their low wages.

"Today's vote showed Uber, Lyft, and the Mayor that the Minneapolis City Council will not allow the East African community, or any community, to be exploited for cheap labor," said Jamal Osman, a council member who co-authored the policy. "The Council chooses workers over corporate greed."