Minneapolis Is About To Kill Ride-Sharing
Just last month, Seattle’s disastrous attempt to enact a minimum wage for app-based food delivery drivers was in the news. The result was $26 coffees, city residents deleting their delivery apps, and drivers themselves seeing their earnings drop by half. Now, the Minneapolis City Council has decided to join the fray in the multifront progressive war against the gig economy—and this time, the outcome could be even worse.
In March, the Minneapolis City Council enacted an ordinance that creates a minimum wage rate for ride-share drivers in the city. It does so via a per-minute and per-mile calculation, which is currently set at $1.40 per mile and $0.51 per minute. It also sets a floor of $5 if the trip is short and otherwise would cost below that level.
The council claims it enacted the ordinance to ensure that ride-share drivers in the city were paid at an amount analogous to the city’s $15.57 per hour minimum wage. Even putting aside the traditional economic arguments against the minimum wage—see California’s recent fast-food minimum wage law as Exhibit A—the council’s logic fails on its own terms. The day after the city council initially passed the ordinance, the state Department of Labor and Industry released a report showing that a lower $0.89 per mile and $0.49 per minute rate would be sufficient to make driver pay equivalent to the $15.57 minimum wage.
As a result, the ordinance was immediately vetoed by Minneapolis’ liberal mayor—the second time in two years the mayor has vetoed such a measure from the council—only for the council to then override the veto a week later. While the council did not have access to the state’s report for the first vote, it had over a week to review it before the veto-override vote. Incredibly, one city council member even suggested that the state’s report somehow convinced her to change her vote from “no” to “yes” on the minimum wage between the initial vote and the override vote.
In response to the council’s override, ride-sharing companies like Uber and Lyft have announced they are planning to pull out of the Minneapolis market entirely unless the council reverses course. The ride-share companies originally were set to leave the city on May 1 when the ordinance went into effect, but after a last-minute agreement by the council to delay the ordinance’s effective date to July 1, the ride-share companies are in wait-and-see mode. Â
If the council refuses to back down by July, it will cause even deeper ramifications for city residents than the higher food prices that Seattleites saw in the wake of their aforementioned minimum wage hike for delivery drivers. The ride-share companies have indicated that while they would support the minimum compensation levels proposed in the state’s study, the city’s higher rates are cost-prohibitive.
Panic has set in among many lawmakers at the state capital, with some calling for the Legislature to preempt the Minneapolis ordinance. Democratic Gov. Tim Walz, who previously vetoed a statewide version of a minimum wage bill for ride-share drivers, has stated that he is “deeply concerned” about the prospect of losing ride-sharing services in the Twin Cities.Â
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Article from Reason.com
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