Minnesota’s Ride-Hailing Deal with Uber and Lyft Has a Price

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Uber and Lyft drivers in Minnesota are set to receive higher wages due to an agreement between the state and the two largest ride-hailing companies in the U.S. This is a result of a new law which offers driver protections while limiting the state government’s role.

Governor Tim Walz has publicly supported the bill and is expected to sign it. Starting January 1, 2025, drivers are guaranteed to earn at least $1.28 per mile and $0.31 per minute. These rates align with recommendations from a state study, which suggested between $0.89 and $1.207 per mile and $0.487 per minute.

The new bill concludes a lengthy period during which Uber and Lyft repeatedly threatened to exit the state, yet it’s unlikely to resolve debates over wage-setting for gig workers. The bill is a compromise, providing concessions to multiple parties — albeit not necessarily to riders.

Josh Gold, Uber’s senior director of public policy, stated that while Uber is pleased to remain operational in Minnesota, the company still considers the rates too high.

“Riders and drivers are going to feel the increase in rates and the decrease in demand that results from that,” said Gold.

Uber and Lyft have argued that raising pay or adding protections leads to a lose-lose situation, despite the benefits of higher wages and added protections like vehicle insurance and compensation for job-related injuries.

These protections must be funded somehow. In New York City, where Uber and Lyft contribute to the Black Car Fund for drivers’ worker’s compensation, a 2.75% levy on each fare is borne by the rider.

The potential for increased rider costs was a primary reason Governor Walz vetoed an earlier version of the bill, claiming it could make Minnesota one of the priciest states for ride-hailing.

Some local politicians are dissatisfied with the new law as it prevents Minneapolis — which accounts for 95% of taxi and ride-hail trips per the state’s Department of Labor and Industry — and other cities from setting their own wage floors.

In March, Minneapolis’ city council passed an ordinance ensuring drivers earn a minimum of $1.40 per mile and $0.51 per minute. Uber and Lyft, opposing the bill, threatened to leave by May 1, 2024, but reconsidered if the Minnesota legislature intervened, which it did.

“Any and all attempts to undermine local control are bad,” posted Minneapolis Council vice president Aisha Chughtai on X. “It’s a Republican and corporate tactic used around the country. Watching our Gov. Tim Walz cave to multibillion-dollar corporations in insisting on preempting Minneapolis is gross.”

In 2023, Uber and Lyft together spent $220,000 on lobbying efforts in Minnesota, according to state lobbying records.

The legislative agreement in Minnesota unfolds as the gig worker battle continues in California. The California Supreme Court is set to hear arguments on the constitutionality of Proposition 22, the 2020 law that classified drivers as independent contractors rather than employees.

The outcomes of these legal processes will affect how ride-hailing firms operate nationwide, the compensation and protections drivers can expect, and potential increases in rider fares.

Rebecca Bellan
Rebecca Bellan
Rebecca covers transportation. She’s interested in all things micromobility, EVs, AVs, smart cities, AI, sustainability and more. Previously, she covered social media for Forbes.com, and her work has appeared in Bloomberg CityLab, The Atlantic, The Daily Beast, Mother Jones, i-D (Vice) and more. Rebecca studied journalism and history at Boston University.

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