In a significant development, both Lyft and Uber announced that they would be shutting down their operations in Minneapolis. This decision comes in response to the City Council's vote to override a mayoral veto and implement a regulation that requires ride-hailing services to raise driver wages to match the local minimum wage of $15.57 per hour.

Lyft, in a statement, criticized the recently passed ordinance, labeling it as "deeply flawed." While the company acknowledged the need for a minimum earning standard for drivers, it claimed that the specific regulation imposed by the council was unsustainable and would make their operations unviable. Lyft emphasized that driver wages must be elevated in an honest manner that also keeps the service affordable for riders.

Uber, on the other hand, has yet to comment officially on the matter. Reports suggest that it will follow suit and halt its services in Minneapolis on the same day the new law goes into effect, which is May 1. Both Lyft and Uber also pledged to advocate for statewide legislation that would counteract the Minneapolis ordinance.

In response to this development, state House Republicans proposed a bill on Thursday that would preempt local regulations for ride-hailing services. The bill aims to address the concerns raised by Lyft and Uber, and potentially pave the way for the companies to continue operating in Minneapolis.

The City Council voted in favor of the measure last week by a 9-4 margin, despite opposition from Mayor Jacob Frey, who promised to veto it. Under the new regulation, ride-hailing companies are required to pay drivers a minimum of $1.40 per mile, $0.51 per minute of transportation time, or $5 per ride, whichever amount is greater. However, the stipulation only applies to the portion of the trip that occurs within the city limits of Minneapolis.

Critics of the ordinance argue that the increased costs resulting from this regulation will impact everyone, including individuals with low incomes and disabilities who rely heavily on ride-hailing services. Supporters, however, believe that the new law is necessary to ensure fair wages for drivers, particularly those from marginalized communities, who are often subject to exploitation.

City Council member Jamal Osman, a co-author of the policy, emphasized the importance of dignified minimum wages for ride-hailing drivers. He stated that the council's vote demonstrated their commitment to prioritizing workers' well-being over corporate interests, avoiding the exploitation of communities such as the East African community.

Governor Tim Walz, a Democrat, expressed concerns about the potential consequences of Lyft and Uber's departure. He emphasized the reliance of many, including disabled individuals, on these services. He hopes that the Legislature will work toward finding a compromise that addresses fair pay for drivers while also preventing the companies from leaving the city.

It is worth noting that Seattle and New York City have already implemented similar policies that increase wages for ride-hailing drivers, and they continue to operate in these cities.