Hobbit Business Review

Uber and Lyft Are Leaving a Major U.S. Metro After City Council Bumps Up Drivers’ Minimum Wage

It might be more difficult to get around Minneapolis after Lyft and Uber say they are ready to exit the city.

On Thursday, the Minneapolis City Council voted to increase driver wages to the local minimum wage for the city, which is $15.57 per hour.

But that was too much for the ride-share companies, which are now threatening to leave the city due to the new minimum wage implementation which will force them to pay drivers a flat fee.

The decision comes after the City Council voted 10 to 3 to override a veto by the city’s mayor to instate a pay raise ordinance for drivers in the city.

“It should be done in an honest way that keeps the service affordable for riders,” Lyft said in a statement. “This ordinance makes our operations unsustainable, and as a result, we are shutting down operations in Minneapolis when the law takes effect on May 1.”

Uber issued a similar statement provided to local outlet Fox 9.

“We are disappointed the Council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded,” the company said. “But we know that by working together with all stakeholders – drivers, riders and state leaders – we can achieve comprehensive statewide legislation that guarantees drivers a fair minimum wage, protects their independence and keeps rideshare affordable.”

Last month, Lyft became the first ride-share app to implement minimum pay for drivers by guaranteeing that drivers would take home a minimum of 70% of what riders pay, regardless of external fees.

“We think hopefully it will get more drivers driving for Lyft, but also just make the whole sector stronger,” Lyft CEO David Risher told Reuters at the time. “We have more drivers now than we’ve had, I think, since the middle of 2019. It’s strong and I tell you what, it’s getting even stronger.”

If Uber leaves Minneapolis, it will make the city the only U.S. metro area without Uber in the country.

Uber was up a whopping 140% year over year upon the news as of Friday morning. Lyft was up over 93% for the same period at the same time.

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