BusinessUber and Lyft Bail on Major U.S. City as Drivers' Minimum Wage...

Uber and Lyft Bail on Major U.S. City as Drivers’ Minimum Wage Increases

The possibility of facing transportation challenges in Minneapolis seems likely as Uber and Lyft announce their potential departure from the city. Recently, the Minneapolis City Council made a pivotal decision to raise driver wages to match the local minimum wage of $15.57 per hour, a move that has prompted backlash from the ride-sharing companies. This shift in policy will compel them to adopt a flat fee structure for driver payments, leading to their threat of leaving the city.

Following a 10 to 3 vote by the City Council to override the mayor’s veto and implement the pay raise ordinance, Lyft expressed its concerns through a statement. The company emphasized the importance of maintaining affordability for riders and deemed the new ordinance unsustainable for their operations, ultimately resulting in their decision to cease operations in Minneapolis starting May 1.

Contrarily, Uber also voiced its disappointment with the council’s decision, outlining the implications of their potential departure on drivers and riders. Despite facing challenges, they remain hopeful that collaboration with various stakeholders can pave the way for comprehensive legislation ensuring fair wages for drivers while preserving the accessibility and affordability of rideshare services.

In a strategic move last month, Lyft became the pioneer in guaranteeing minimum pay for drivers by ensuring they receive at least 70% of rider payments, irrespective of external costs. This initiative aims to attract more drivers to their platform and strengthen the overall ride-sharing sector. Interestingly, Uber’s stocks surged by 140% year over year following the news, highlighting the financial impact of their presence in the region. Conversely, Lyft experienced a significant stock increase of over 93% during the same period, showcasing the market response to the potential departure of these ride-sharing giants from Minneapolis. If Uber follows through with their exit, Minneapolis would become the sole U.S. metropolitan area without Uber’s services.

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