In response to the Minneapolis City Council's decision to override the mayor's veto of a minimum wage ordinance for rideshare drivers, Lyft and Uber have announced that they will be discontinuing their services in the city starting from May 1. The council's vote of 10-3 in favor of the override means that rideshare drivers will be entitled to earn the local minimum wage of $15.57 per hour.

Lyft issued a statement expressing its concerns, calling the bill "deeply flawed" and claiming that the new ordinance would render its operations unsustainable. A spokesperson for Lyft stated, "We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders."

Uber also expressed disappointment in the council's decision, claiming that they had disregarded crucial data and effectively pushed the company out of the Twin Cities. Uber's statement, obtained by CNN, mentioned that this move would result in approximately 10,000 people losing their jobs and leave many stranded without reliable transportation options.

While Mayor Jacob Frey voiced his support for a minimum wage for rideshare drivers, he opposed the ordinance on the grounds that it did not consider a Minnesota state study that had determined appropriate payment levels for drivers. "Everyone wants to see Uber and Lyft drivers get paid more. But getting a raise doesn't do a whole lot of good if you lose your job," Mayor Frey stated.

The disputed ordinance mandates that rideshare drivers in Minneapolis should be paid at least $1.40 per mile and $0.51 per minute of driving within the city. However, the analysis referred to by Mayor Frey showed lower figures of $0.89 per mile and $0.49 per minute as the minimum wage benchmarks.

Mayor Frey is now urging local politicians to find a resolution before May 1 in order to avert the significant impact that the departure of Lyft and Uber would have on the region. The rideshare companies have warned that if they were to continue operating in Minneapolis under the new ordinance, user prices would double.

This move by Minneapolis comes amidst a broader nationwide debate over fair wages and job benefits for gig workers. Various cities and states have tried to implement legislation to address concerns raised by the growing gig economy, but such attempts have frequently faced staunch opposition.

Last year, Minnesota Governor Tim Walz vetoed a bill similar to the one in question, citing concerns about Minnesota becoming one of the most expensive states for rideshare services. The rideshare companies have consistently argued that such legislation would negatively impact drivers, as higher prices would reduce demand and result in reduced earnings for drivers.

In 2020, California passed Proposition 22, a controversial ballot measure that allowed Uber and Lyft to classify their drivers as independent contractors rather than employees. This measure, which received significant financial backing from gig economy companies, included provisions for a minimum earnings guarantee.

It remains to be seen whether Minneapolis can find a compromise that will satisfy the rideshare companies, the drivers, and the need for fair compensation in the gig economy. The outcome of this dispute could have wider implications as cities across the country grapple with how to regulate and protect the rights of gig workers.