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Lyft and Uber To Cease Operations In Minneapolis After New Minimum Wage Law (cnn.com) 130

The city council of Minneapolis on Thursday voted 10-3 to allow rideshare drivers to be paid the local minimum wage of $15.57 an hour, overriding the mayor's veto of the bill. As a result, Lyft and Uber said they will cease operations in the city. From a report: Lyft said in a statement the bill was "deeply flawed" and that the ordinance makes its "operations unsustainable." "We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders," said a Lyft spokesperson. Uber said in a statement obtained by CNN that it's "disappointed the council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded."

The ordinance mandates rideshare drivers make at least $1.40 per mile and $0.51 per minute within Minneapolis. However, the analysis Frey referred to showed lower numbers -- $0.89 per mile and $0.49 per minute -- to make minimum wage. The mayor is imploring local politicians to come up with a solution before May 1. The rideshare services say that user prices would double if they stayed in the city.

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Lyft and Uber To Cease Operations In Minneapolis After New Minimum Wage Law

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  • Of course (Score:5, Insightful)

    by quonset ( 4839537 ) on Friday March 15, 2024 @06:41PM (#64318869)

    Lyft said in a statement the bill was "deeply flawed" and that the ordinance makes its "operations unsustainable."

    Having to pay people tends to do that, especially when you're barely making any money [reuters.com] as it is.

    In the second half of 2023, the median earnings for a Lyft driver using their personal vehicle was $30.68, including tips and bonuses per engaged hour. For Uber, it was $33 per hour, in the December quarter.
    "Lyft is trying to earn less money from the drivers in order to grow the amount of driver pool that they have and to grow the amount of passengers that they want to drive and Uber is doing the opposite," said Cambiar's Ballantyne. "This is a huge gamble for Lyft because they make very little money as it is."

    • by hey! ( 33014 )

      Is that $30.68 per hour available for hire, or $30.68 per hour responding and sevicing customers, or $30.68 per hour of actually driving the customer around?

      Also, note the proviso "using personal vehicle". In many places most of the drivers I talked to are leasing vehicles -- from the ridshare company. They aren't clearing anything like a thousand a week, mainly its a way to they can gin up some cash in a hurry.

  • by peterww ( 6558522 ) on Friday March 15, 2024 @06:45PM (#64318877)

    Do we exploit cheap labor to give more people a convenience for less? Or do we provide fair wages for work?

    (Lol jk the question is rhetorical)

  • Without the constant influx of VC cash, these companies' business models will really only work with autonomous vehicles. They're just biding their time and trying to stay afloat, paying human drivers as little as possible while trying to gain (and hold onto) mindshare until true automated full self driving arrives - at which point they will tell the humans "so long, and thanks for all the fish".

    • They got a lot of cash flow.

      So they aint going anywhere.
    • Without the constant influx of VC cash, these companies' business models will really only work with autonomous vehicles. They're just biding their time and trying to stay afloat, paying human drivers as little as possible while trying to gain (and hold onto) mindshare until true automated full self driving arrives - at which point they will tell the humans "so long, and thanks for all the fish".

      In that case maybe these venture capitalist genius princes of the universe should pour there money into something with better profitability prospects than Uber, Lyft and the rest of that ilk until Elon Musk perfects the fully autonomous vehicle technology he promised us back in 2016.

    • I am trying to imagine an autonomous food delivery vehicle, that can survive a hostile environment where people steal deliveries on the regular...
    • They're just biding their time and trying to stay afloat, paying human drivers as little as possible while trying to gain (and hold onto) mindshare until true automated full self driving arrives

      And assuming it does arrive, why should the developers and owners of those vehicles hand them over to Uber or Lyft? They can program a car to drive itself, but can't write an app?

    • Not even sure autonomous vehicles will save them. At the moment they are reliant on gullible drivers wearing all the costs while they pay them rates that mean the average driver is working for way below minimum wage in most places. With autonomous vehicles they are taking on all the costs associated with those vehicles and I would expect competition will be much fiercer as managing a fleet of vehicles is much easier than managing people.
  • by thesjaakspoiler ( 4782965 ) on Friday March 15, 2024 @06:56PM (#64318917)

    There is no place for Ubers and Lyfts in this world.

    • by pz ( 113803 )

      Huh? Uber and Lyft are nothing more than taxi services. If you think otherwise, I recommend looking at the details and operations of taxi services. The only difference is that with traditional taxi services, communications from the customer to the service is done by a phone call, communications between dispatch and driver is done by radio, and pricing is done (for honest drivers) by meter. For Uber and Lyft, they've eliminated the labor behind dispatch and replaced it with digital radio communications,

  • by dgatwood ( 11270 ) on Friday March 15, 2024 @07:01PM (#64318925) Homepage Journal

    The harsh reality is that it costs Uber and Lyft absolutely nothing to continue offering service in a city versus not doing so. Their costs come entirely from operating expenses for keeping their servers up and running, R&D expenses for software, and paying drivers for mileage and wages. The fees they charge riders cover the cost of mileage and wages, and if nobody is riding, they aren't paying mileage and wages. So the marginal cost for offering service versus not offering service is exactly zero.

    What Uber and Lyft are doing by acting this way is sending a message, to intimidate other cities into not passing similar laws, because they want to keep prices low, because some people will choose other modes of transportation if their cost is too high. The last thing they want is for prices to go up to compensate for the higher costs, and for things to end up being business as usual, without a huge drop in ridership, because that will prove that they've been unreasonably underpaying people for years, and will harm their reputation.

    On the flip side, by refusing to provide any service, they're instantly cementing their reputation as being the slum lords of taxi service, and at some point (two or three months at most), a disruptive innovator will cover that city, provide better service, and pass on more of the revenue to drivers. It will be successful enough that drivers in other cities will start to join their service, and eventually they'll kick Uber and Lyft to the curb. So in the long run, this is likely to go down in history as an incredibly shortsighted and generally bad business decision, because it creates an easy opening for new competitors to move into the market.

    • by Required Snark ( 1702878 ) on Friday March 15, 2024 @07:25PM (#64318971)
      You have inspired a phrase that brilliantly describes our current predatory economic paradigm: slum lord capitalism, aka enshittification [wikipedia.org].
    • Obviously it would cost them more unless they pass all cost on to the consumer. Some consumers will bare the costs, but most won't and so business will decrease. Either company could still theoretically make money, but the volume will go down considerably and they're likely looking at this from the perspective of how much it will cost them to carve out an exemption in their app against what they normally make (not much for Uber and a loss for Lyft) and realizing that the cost of doing business is higher tha
    • > a disruptive innovator will cover that city, provide better service, and pass on more of the revenue to drivers

      That seems like a leap in logic. Without competition why would they pass on more of the revenue to drivers?
    • Seattle passed a minimum pay laws for gig workers, including ride-share, and ride-share companies just passed the cost to the consumers. This seems like something else is at play. If I was to guess, too much ambiguity in the new law and therefore unacceptable risk to continue operating.

      As for how it turned out for Seattle, well, so far the rideshare prices went up, less people are ordering rides or food deliveries, more drivers are swarming to Seattle city limits from surrounding cities because "they pay
    • You make it sound simple, and I hope I'm wrong, but why would some other "disruptive innovator" be interested in taking over this now-empty market when the costs are largely based on people costs and they would be faced with the same minimums?

      I don't think there's a magical way around that.

  • Spending (Score:4, Informative)

    by ArchieBunker ( 132337 ) on Friday March 15, 2024 @07:37PM (#64318997)

    Perhaps Uber and Lyft should have put some money away for a rainy day. Instead they spent $200 million on passing favorable legislation. https://www.latimes.com/califo... [latimes.com]

    Just think of the positive headlines and worker happiness had they passed that money down. Pay people more money? Nah fuck it let's spend it on commercials and lobbying instead.

    • Without the "favorable legislation" they wouldn't exist as a service, so rather than viewing the $200M as wasted, it's was actually a valid business expense...

  • Easy solution (Score:3, Interesting)

    by rsilvergun ( 571051 ) on Friday March 15, 2024 @08:50PM (#64319099)
    the government can just start a non-profit rideshare. There's several already from cities that kicked Uber & Lyft out. They pay better and provide the same service.
    • So taxpayers are funding non-profit ride share/ride services? That sounds great, until the govt decides to undercut YOUR employer with taxpayer dollars and drive you out of a job...

      • by Calydor ( 739835 )

        Surely the non-profit rideshare services are not non-worker rideshare services. There's still a job available.

      • Company loyalty became a thing of the past when companies stopped showing loyalty to workers. Which coincidentally was right around the time they started using cheap overseas labor to replace us all.

        Companies were never loyal to you. Companies were faced with strong opposition from unions and they couldn't just use cheap overseas labor to undercut you.
  • It's the emperor's new clothes offering pseudo autonomy to "consultants" who are then abused as underpaid employees.

    Instead, Uber and Lyft should be treated as the taxi companies they are. If that can't happen, then previous Uber and Lyft drivers should be temporarily assisted onto a path to become legitimate taxi drivers.

  • > The city council of Minneapolis on Thursday voted 10-3 to allow rideshare drivers to be paid the local minimum wage of $15.57 an hour

    Was getting paid this specific amount of money not legal before?
    Boy, they sure do like their rules in this city!

  • Ironically, $15/hr was the minimum hourly pay that drivers were guaranteed when Lyft first launched in the Twin Cities market back in 2013.

    And by guaranteed, I mean that Lyft would pay a driver the difference between what they made per hour UP TO $15/hr.

    Driver made $10/hr, Lyft paid extra $5. Driver made $20/hr, Lyft paid extra $0. Driver made $0/hr, Lyft paid $15/hr.

  • So double them?

    They are free to pull out, I doubt they are free to get together and promise each other they will pull out until government gives in. That is clearly what happened here, they colluded.

    • Who knows, Black Market Taxi is a pretty straightforward business model to have independently as well. And that business model pretty singularly dictates this kind of behaviour - you know you're stealing from the state, workers and honest competition, you hear that they have plans to come after you, you know you're as far from being in the right as one gets - then self-righteous whiny threats, hoping that public servants cave, is you only option.

      You don't need to collude with the rest of your sector, bec
  • ... not rip off workers? Damn shame...
  • Is anyone ever impressed by these blustering threats from these "disruptive" technological enslavement companies?

    Don't want to serve the city anymore? Good, then fuck off. And that tool of a mayor can go to hell too.

This place just isn't big enough for all of us. We've got to find a way off this planet.

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