Worst for Working Families

No single piece of tech legislation this year has resulted so swiftly in so many lost jobs as Minneapolis’s new wage law for app-based gig drivers. With an estimated 8,000 drivers out of work starting next month, the new rideshare ordinance wins this year’s prize for Worst for Working Families.

The new bill is a well-intentioned effort to increase driver pay rates, but unfortunately, the legislation threatens severe downstream consequences for riders, drivers, and working families across Minneapolis. So bad are the consequences that Minneapolis’s Mayor Jacob Frey twice vetoed the measure, calling it, “dramatically off.”

Sadly for Minneapolis, the City Council overrode the Mayor’s most recent veto. With rideshare costs set to spike, Uber and Lyft have announced their exit from the Twin Cities market unless legislative changes are made.

But Minneapolis isn’t the only city to see new wage rules backfire on workers this year.

Lessons from Seattle and New York
Take Seattle for example. There, new wage-floor legislation adds a fee to takeout orders to support drivers who make food deliveries. But the new wage requirements have resulted in skyrocketing costs for consumers, with $26 coffee and $122 Thai takeout. As a result, restaurants have seen online orders plummet, which has meant less work for drivers themselves.

New York paints the same picture. There, drivers are seeing reduced opportunities for tips as platforms work to blunt the cost of new wage legislation for consumers.

Less Work for Minneapolis Drivers
At first glance, the notion of boosting driver income makes sense. However, big changes in the price of rideshares translate to big changes in consumer behavior. 

Even if Uber and Lyft were to stay in Minneapolis, unprecedented wage requirements would turn rideshare into a luxury reserved solely for the wealthy — which in turn means far fewer rides for drivers. This threatens the tens of thousands of Minnesotans who rely on these services daily to access employment, healthcare, and other vital resources — and the income of the drivers who provide those services.

Damage to Minneapolis Riders
The statistics paint a sobering picture. Over half of all Lyft trips in the Twin Cities either originate from or terminate in low-income areas, highlighting the crucial role rideshare plays in bridging transportation gaps for marginalized communities. With nearly half of riders identifying as racial or ethnic minorities, any measure that drives a spike in the cost of rideshare services threatens to deepen existing inequities.

Perhaps most concerning of all is the reality that low-income riders — those earning less than $50,000 annually — are over six times more likely to rely on rideshares for healthcare-related appointments compared to their higher-income counterparts. By creating financial barriers to access, this bill threatens to jeopardize the health and well-being of the most vulnerable Minnesotans.

Despite the promised increase in pay rates, the anticipated drop in ride demand would ultimately leave drivers worse off financially while harming consumers: a classic case of well-intentioned policy-making gone awry.