Checkpoint: Now is the Time for Minneapolis to Stand Up to Ride-Hailing Apps
Klaus Vedfelt
With Uber and Lyft threatening to pull out of the city due to a new minimum rate law there and the city council set to reconsider the legislation, now is the time for Minneapolis to stand up to rideshare companies that have for too long been abusing their “contractors” and pave a new path that other municipalities can follow to deliver citizens better service at a better price.
In March the Minneapolis city council overwhelmingly voted to override Mayor Jacob Frey’s veto of a law that requires ride-hailing companies to pay drivers either $1.40 per mile and $0.51 per minute, or $5 a ride, depending on which sum would result in a greater payment for the driver, excluding tips. These rates are supposed to bring the wages paid to drivers in line with the city’s minimum wage of $15.57 an hour.
The ten to three city council vote would move to protect a class of gig workers in the city that operates their own cars at their own expense and do so for what ends up averaging out to be below minimum wage, especially after the costs of their driving are accounted for.
In retaliation, Uber and Lyft, the only two ride-hailing companies currently licensed to operate in Minneapolis, have said that on May 1, if the law is allowed to take effect, they will stop allowing customers to select drop-off and pick-up points within the city limits of Minneapolis. Whether it’s because Uber and Lyft have culled the herd of 39 local taxi companies to just six, or because the availability of ride-share apps has given rise to demand for the services, local officials have made it clear that there would not be enough taxis to immediately meet demand in the city.
Let’s set aside the fact that local taxi companies say they’re prepared to hire drivers to meet demand with little to no hoops to jump through and let’s set aside the fact that at least nine companies champing at the bit to replace Uber and Lyft in the city. Let’s also set aside the fact that many rideshare drivers should rightly be thought of as employees instead of contractors. Instead, let’s dwell for a moment on what it would mean if the city council capitulates to the ride-share companies and how they could defy them and replace them with something better for everyone.
If the city bends to ride-share companies and the mayor (who has taken their side). It will set a precedent of companies blackmailing local governments whenever said government wants to enforce a law against them. Mayor Frey gestured to this in a moment Monday, when he expressed deep concern over the sort of precedent it would set to enforce a minimum wage on rideshare workers.
“Are we now planning to set a minimum wage for every industry?” Mr. Frey said.
The answer Mr. Frey, is a definitive “yes.” We should enforce a minimum wage in every industry, and the fact that bloated tech conglomerates like Uber and Lyft have been allowed to run roughshod over protections offered to employees is a great shame.
Uber and Lyft have extended a symbolic olive branch, saying that they support a wage suggested by a Minnesota state report, which analyzed some 18 million rides, and found that paying drivers a rate of $1.21 per mile and 49 cents per minute for a ride across the Twin Cities would rise on average to meet the city’s minimum wage level.
This symbolic olive branch has some appeal. First of all there are real concerns about what would happen to people who have come to rely on ride-hailing apps since they drove the taxi business into the ground. The National Federation of the Blind of Minnesota president Corbb O’Connor, for example, has expressed real concerns about pulling the rideshare rug out from blind people in the city, and others who have come to rely on it. There is of course the concern that striking too much of an adversarial stance against these companies could spook other tech companies that the city would like to have on its side.
However, the dichotomy presented by the rideshare companies and the politicians who support their stance is false. There is a third option, and it’s a public option.
There’s no reason why the city of Minneapolis couldn’t start its own ride-share service. Unburdened by the need to fatten the pockets of absentee investors or everpresent onus to send the company’s stock price as high as possible the city could easily both pay drivers more and, likely, deliver better rates to riders. The city could also do better by the drivers by classifying them as employees or even by supplying the vehicles themselves so that drivers do not need to maintain their own cars and so every car can be standardized to provide a more consistent experience.
The public option could act in concert with the private market, competing with private taxi services at cost to keep them and whatever ride-share services fill the void left by Uber and Lyft honest with their customers. The only real problem keeping the city from making such a plan a reality is appropriations and the timeline, of which could likely be overcome if the city council could retain its ten to three majority to stand up to these companies.
Whether Minneapolis chooses to capitulate to the ride-hailing companies or not conflicts like this one --- massive companies aiming to roll over local governments --- are sure to escalate as the public demands action from officials and companies attempt to squash any resistance. As Mr. Frey says, we should be concerned about the precedent we are setting.
