Minneapolis’s Rideshare Bill Misses the Mark

More people are using ride-hailing apps than ever before, but with new rideshare legislation passed by the Minneapolis City Council earlier this month, that could all be set to change in the Twin Cities.

Minneapolis Mayor Frey himself has opposed the contentious ordinance, calling it “dramatically off” and citing the impact of spiking app-based rideshare costs limiting opportunities for drivers in the area. Though he has vetoed the bill, concerns remain that the council will override it — leading to higher prices and perhaps most importantly, service loss to the thousands of Minnesotans who need rideshare access the most.

The new bill is a well-intentioned effort to increase driver pay rates, but unfortunately the bill threatens severe downstream consequences for riders, drivers, and working families across Minneapolis. For evidence of the bill’s unintended consequences, look no further than Seattle or New York, where similar wage-floor legislation has backfired in a big way.

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.

At first glance, the notion of boosting driver income makes sense. But big changes in the price of online delivery translates to big changes in consumer behavior. By creating unprecedented wage requirements, the Minneapolis wage floor bill risks transforming 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.

Mayor Frey did the right thing by vetoing the new rideshare bill, and it’s not too late for the City Council to join him by correcting their course.

Instead of harming gig workers and riders, Minneapolis lawmakers should learn from the mistakes of Seattle and New York, and strike the right balance between fair pay for drivers and affordable mobility for everyone in the Twin Cities.

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