Topline
Minnesota Gov. Tim Walz (D) vetoed a bill Thursday that would have set minimum pay rates for Uber drivers, after the company publicly threatened to stop serving most of Minnesota and boost prices in the Minneapolis-St. Paul area—halting the latest state-level effort to boost gig workers’ pay.
Uber has threatened to stop most of its service in Minnesota if a bill setting minimum pay for … [+]
Key Facts
The proposed legislation, which was sent to Walz on Sunday after passing the state House and Senate, would have required digital ride-hailing companies like Uber and Lyft to pay drivers a $5 fee and at least $1.45 per mile—or $1.25 per mile outside the Twin Cities area—as well as $0.34 per minute for any time spent driving customers.
Walz vetoed the bill but set up a working group to recommend new rideshare rules next year, saying in a brief statement he is “committed to finding solutions that balance the interests of all parties, including drivers and riders,” but this “is not the right bill to achieve these goals.”
Hours before the veto, Uber threatened to halt service outside of the Minneapolis-St. Paul area and only offer “premium products”—along with premium prices—in the metro area starting August 1 if the bill was enacted.
Uber spokesperson Freddi Goldstein told Forbes the proposal “will make it impossible to continue serving most areas of the state,” arguing the pay hikes would cause demand for Uber to plummet.
Goldstein said the company had tried to work with lawmakers for “several months” to create legislation that would provide “flexibility and benefits to drivers without compromising service for riders,” but the requests went unanswered.
Key Background
The Minnesota bill is the latest in a string of nationwide efforts to offer higher wages and more benefits to ride-hailing drivers and other gig economy workers. Similar efforts to guarantee a minimum wage for drivers have succeeded—namely in New York City and Seattle—but both New York and Washington have laws that don’t allow drivers to be considered employees, the New York Times reported. Uber and Lyft have said their drivers are not employees and are instead independent contractors because of the flexibility in hours that comes with their jobs. Advocates for tighter rules argue that rideshare companies underpay drivers and that even though drivers are considered independent contractors, the companies still have control over their work, making them more like employees who ought to enjoy benefits. The president of the Minnesota Uber/Lyft Drivers Association told the Minnesota Reformer that he can’t predict the future if Uber greatly reduced services in terms of jobs that would be lost, but argued the governor should sign the bill because “it’s the right thing to do.”
Crucial Quote
Rep. Hodan Hassan (D), who sponsored the Senate bill, highlighted in a statement to the Star Tribune on Wednesday that similar changes have been made in other states. “We will not tolerate bad actors exploiting hardworking Minnesotans to pad their corporate pockets,” she said. “If your business relies on keeping your workers in poverty, you don’t have a viable business model, and you need to do better here in Minnesota.”
Contra
Uber says the legislation would cause drivers in Minneapolis to make more per mile than drivers anywhere else in the country, which Goldstein said is “completely out of touch with cost of living in Minneapolis and what riders can afford.” Goldstein said Uber proposed a compromise of $1.17 per mile and $0.34 per minute, along with occupational accident insurance coverage and clarification that drivers are classified as independent contractors. She added that if possible, it is Uber’s “goal to reach a compromise for the next session.”
Big Number
50%. That’s how much Goldstein said the company is estimating the cost of rides would increase for users if the bill became law. She said this would in turn decrease demand by an estimated 30%, resulting in drivers actually taking a pay cut rather than making more money.
Tangent
Rideshare company Lyft has also opposed the bill. The company told Axios that rate increases would limit who could use the app and would result in fewer rides. “Instead of forcing a bill that would destroy the service for many of the communities who depend on it, we should continue to work together on a solution that benefits all,” the company told Axios in a statement.
Further Reading
Uber says operations outside Twin Cities will cease if rideshare wages bill signed into law (CBS)
Uber says it will shut down some services in Minnesota if governor signs new regulations (Minnesota Reformer)
Minnesota lawmakers battle with Uber, Lyft over driver pay, protections (Axios Twin Cities)
