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Lyft threatens to exit Minneapolis if the city raises the minimum wage for drivers, claiming prices could double and 'only the most wealthy could still afford a ride'

Lyft app
Lyft threatens to leave Minneapolis if the city raises the minimum wage for drivers, because prices could double and "only the most wealthy could still afford a ride."Pavlo Gonchar/SOPA Images/LightRocket via Getty Images
  • The Minneapolis city council has advanced a bill that could raise the minimum wage for rideshare drivers.

  • In response, Lyft and Uber threatened to leave Minneapolis and called on the city's mayor to veto the bill.

  • "Prices could double, and only the most wealthy could still afford a ride," said Lyft.

The Minneapolis city council's move to hike the minimum wage for rideshare drivers has Lyft threatening to exit the city if the bill becomes law.

The rideshare company said in a Thursday statement seen by Insider the bill would hurt drivers' earnings because "prices could double and only the most wealthy could still afford a ride."

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The company said in a separate letter to the city council on Tuesday that "should this proposal become law, Lyft will be forced to cease operations in the City of Minneapolis on its effective date of January 1, 2024."

Should the bill be enacted, drivers could earn a minimum of $1.40 for every mile and $0.51 for each minute, or a flat rate of $5 if it's higher. This rule would only apply to rides within the city.

The company urged the city's mayor, Jacob Frey, to veto the proposal, per the statement. The mayor has until next Wednesday to veto the bill.

The city council, with 12 democrats and an independent, voted 7-5 for the new rule, per CNN. This follows Minnesota's Democratic Governor vetoing a similar bill for rideshare drivers in May, per the Associated Press.

Rival rideshare company Uber also lashed out against the law.

CNN reported that in an email to its drivers on Monday, Uber said it would have no choice but to reduce service or potentially shut down operations in the city if the bill comes into effect.

"We are disappointed by the results of today's vote and the overall process in Minneapolis," an Uber spokesperson told Insider in an emailed statement. The company is weighing its next steps.

The bill also introduces other protections for rideshare drivers, like requiring rideshare companies to inform drivers of the estimated distance and duration to the pickup point and for the entire ride, before offering them the assignment.

"We make less than $300. We fill up our tank twice, that's $100, and the wear and tear, and our time...for 12 hours, we make less than $200," Marianna Brown, who has driven for Uber for 6 years, told CBS News Minnesota about her earnings from a day of working for the ridesharing company.

"How is that fair? We are living below poverty level," she added.

Lyft and Uber's drivers told Insider in April that riders often don't tip, believing drivers earn more from fares than they do. One driver said, "Uber has successfully convinced customers that drivers get paid way more than we do."

To be sure, data from Rakuten Intelligence shows a 92% rise in Uber and Lyft ride costs between 2018 and 2021. Even the CEO of Uber was taken aback by the price a reporter paid for a 2.95-mile ride to see him.

Lyft laid off over 1,000 employees in April — over a quarter of its workforce — to compete with Uber by using the cost savings to lower ride prices, Insider previously reported. This move helped Lyft recover market share after missing revenue forecasts in the first quarter of 2023.

The Minneapolis mayor's office did not immediately respond to a request for comment from Insider, sent outside regular business hours.

Read the original article on Business Insider