House, Senate leaders announce deal with Minneapolis council on Uber and Lyft driver rates

Minnesota Capitol. Photo courtesy House Information Services.

Minnesota legislative leaders announced a deal with members of the Minneapolis City Council on Monday on minimum pay rates for Uber and Lyft drivers. Notably absent from the deal, however, are Gov. Tim Walz and the two companies.

Uber and Lyft both said on Monday they will leave Minnesota if the rates in the deal — $1.27 per mile and 49 cents per minute — take effect.

A spokesperson for Walz called the deal a “positive step,” and that “the governor’s goal remains to be finding a solution that ensures workers are paid fairly while allowing these essential services to remain in Minnesota.” Last year, Walz issued the only veto of his tenure on a bill setting minimum pay for drivers after Uber threatened to dramatically curtail service in the state.

House Majority Leader Jamie Long, DFL-Minneapolis, acknowledged that the companies were not involved in the negotiations, but said he doesn’t think they will follow through.

“I think they’re bluffing,” Long said in a news conference with reporters on Monday. “They’re operating in Washington state at rates that are above what we’re proposing.”

That’s only half true: Washington state mandates a higher per mile rate of $1.31 outside of Seattle but its per minute rate of 38 cents is significantly lower. (In Seattle, drivers are entitled to $1.55 per mile and 66 cents per minutes.)

As part of a deal with the companies, Washington state also defines drivers explicitly as independent contractors in state law, a significant prize for Uber and Lyft and which Minnesota Democrats don’t support.

While the companies and the governor may not be on board, Long emphasized the concession of Minneapolis City Council members to reduce their per mile rate 13 cents. The Minneapolis City Council overrode a mayoral veto in March to pass minimum rates of $1.40 per mile and 51 cents per minute, which are set to take effect on July 1 after the council chose to delay enactment at the request of state lawmakers.

“This was a really big move for the Minneapolis City Council,” Long said.

A spokesman for House Speaker Melissa Hortman, DFL-Brooklyn Park, declined to comment when asked if she supports the deal.

The state does have the power to override local leaders through preemption, but Democrats say it’s not an option they want to pursue. They want to avoid setting the precedent of preempting cities from enacting more stringent labor laws than the state.

In a statement, Minneapolis Council President Elliott Payne said, “It was refreshing to work with our state leaders who were willing to engage in tough conversations without compromising the core DFL value of making sure every worker, regardless of profession, can earn a minimum wage.”

With just two weeks left in the session, legislative leaders are under pressure to keep their narrow majorities together to pass their entire agenda, which includes some spending and a major infrastructure package. In the Senate, Democrats have just a one-seat majority, giving any one senator significant leverage.

The author of the Uber and Lyft bill in the Senate — Omar Fateh of Minneapolis — wielded his de facto veto last session to push the Uber and Lyft bill through the Legislature even though it was ultimately vetoed. Sources familiar with the negotiations say Fateh is again dug in and aligned with the progressive flank of the Minneapolis City Council that wants to push rates above the recommendations in a state study of more than 18 million trips taken in the state in 2022.

That study, commissioned by the state Department of Labor and Industry, estimated that typical Twin Cities drivers would have to be paid at least 89 cents per mile to pay for vehicle costs and their share of payroll taxes plus 49 cents per minute to earn the Minneapolis minimum wage of $15.57 per hour.

The researchers — economists Michael Reich of University of California-Berkeley and James Parrott of the New School — also calculated a higher per mile rate of $1.20, which would compensate drivers for benefits like health insurance, paid sick leave, paid family medical leave and retirement savings. Neither calculation includes tips.

Long justified the higher rate by noting it moves closer to the rates proposed in the state report for greater Minnesota of $1.39 per mile and 49 cents per minute. Higher rates are needed in greater Minnesota to guarantee drivers a lower minimum wage — the state minimum of $10.85 per hour — because drivers spend more time waiting for fares and driving to pick up riders.

That means typical drivers in greater Minnesota would be guaranteed less than the state minimum wage of $10.85 while Twin Cities drivers — who provide about 95% of rides in the state — would be entitled to more than the Minneapolis minimum wage of $15.57 per hour if demand stays constant.

Asked about that disparity, Long said: “Sounds like a good compromise.”

Uber sent rate proposals to lawmakers last week that are significantly lower than those recommended in the state study. The company criticized the state study for what it called “exaggerated” cost estimates. The company told lawmakers it would support an earnings floor 68 cents per mile and 39 to 42 cents per minute.

Last year, Uber told drivers it would agree to $1.17 per mile and 34 cents per minute on the condition that there would be preemption over local regulations and drivers would be defined as independent contractors.

A spokesman for Lyft said the company supports the lower cost estimate in the state report.

Uber says since Seattle set minimum pay rates, drivers have seen their overall income decline even while their per trip earnings have increased. The company says that’s due both to lower demand and more drivers signing up to work on their platform.

Long served on an interim task force on Uber and Lyft pay that recommended the state pass two different rates, one for greater Minnesota and one for the metro, due to the significant market differences.

Sen. Jim Abeler, R-Anoka, the lone Republican to endorse the deal in a news release from legislative Democrats and members of the City Council, later said through a spokeswoman he was misinformed about Uber and Lyft’s lack of participation in the negotiation.

“I trust those in the room will keep negotiating in good faith to keep ride share companies operating for those who need them,” he said in a statement.

Other state Republicans held a news conference to blast the deal, saying it wasn’t a deal at all since it didn’t involve the companies.

“There’s a two word message for the DFL today: Grow up,” said Rep. Pat Garofalo, R-Farmington. “We have a Minneapolis City Council off the rails, jeopardizing a critical component of transportation infrastructure in our state. The time for DFL dithering and delays must come to an end.”

The post House, Senate leaders announce deal with Minneapolis council on Uber and Lyft driver rates appeared first on Minnesota Reformer.