Minneapolis Residents Left Hanging as Uber, Lyft Prepare to Abandon City over ‘Excessive’ Driver-Pay Law

Twice a week, Jim Grathwol’s son, Matthew, travels to a Minneapolis clinic to have his blood drawn and to receive anti-psychotic injections that are vital to maintaining his mental health.

Three times a week, the 33-year-old Minnesotan travels to and from Alcoholics Anonymous meetings. He’s also going back to school to finish a degree in screenwriting, his dad said.

Over the last five year, Grathwol said, his son has made a tremendous recovery and is successfully managing a schizoaffective bipolar disorder that once sent him spiraling. He lives on Social Security Disability but is working hard on getting back on his feet.

To get everywhere that he needs to go, Matthew depends on Lyft, the California-based rideshare service. He gets a special Lyft travel benefit as part of his Medicare program.

“This is a special, niche market,” Grathwol said of the medical-waiver program, “but gosh and golly, I’ll tell you, it is a great benefit that gives my son independence.”

But the Lyft rides that Grathwol’s son and many others depend on may not be available in Minneapolis for long after the city’s far-left council recently mandated such drastic increases in driver pay that both Lyft and its competitor, Uber, say they’re leaving the city on May 1.

Councilmembers determined new driver-pay rates without requesting local data from the rideshare companies or inviting the companies’ leaders to engage in their process.

Lyft leaders called the Minneapolis ordinance “deeply flawed.” The Star Tribune editorial board said the council “ill-advisedly voted to require an excessive minimum wage” for drivers.

Minneapolis’s Democratic mayor, Jacob Frey, vetoed the ordinance. The council almost immediately responded by overriding the veto with a 10-to-3 vote, though a majority of council members on Thursday expressed a willingness to revise the legislation in response to overwhelming public backlash.

Still, state lawmakers on both sides of the aisle are scrambling for a solution to keep Lyft and Uber in town and available to the thousands of Twin Cities residents who rely on them.

Advocates for the elderly and disabled are raising concerns for their clients, who use rideshare services to get to critical appointments. Mothers Against Drunk Driving has expressed worries about having more intoxicated drivers on Twin Cities roads. Supporters of downtown businesses worry that without Lyft and Uber, fewer customers will travel into the city’s core.

And while a loud contingent of rideshare drivers cheered the council’s effort, contending that Lyft and Uber are bluffing about their intention to leave, drivers who spoke to National Review said they’re taking the companies at their word, and they’re preparing for the fallout.

“They will definitely leave,” said Omar Adan, vice president of the Minnesota Rideshare Drivers Association, or MRDA, which is urging state and local leaders to engage with the companies.

Adan said he supports efforts to increase driver pay, but he is critical of the Minneapolis council and another organization of drivers, the Minnesota Uber/Lyft Drivers Association, or MULDA, which Adan described as a “progressive-left organization” that lobbied hard for the high pay rates. He said it was “outrageous” and “irresponsible” for the council to jack up rates so high that they’re driving Lyft and Uber out of town.

The drivers — many of whom are East African immigrants with little education and few other employment opportunities — will be hurt if and when Lyft and Uber leave, Adan said.

“They don’t have any other side job,” he said. “They will lose at the end of the day.”

‘A Game of Chicken’

The ordinance approved this month by the Minneapolis council is a retread of a measure Frey vetoed last year. The council’s far-left wing, empowered by last year’s elections, tried again.

In a supposed effort to ensure that rideshare drivers earn the equivalent of Minneapolis’s $15.57 minimum wage, the city council upped driver-pay requirements to $1.40 per mile and 51 cents per minute. They didn’t bother waiting for a state labor and industry study on the matter.

The day after the vote, the state’s Department of Labor and Industry released its study, which found drivers could earn the equivalent of the minimum wage if they are paid 89 cents per mile and 49 cents per minute, far below the council’s rates. Upping that to $1.21 per mile and 49 cents per minute could afford them benefits, including paid leave and health insurance, according to a Star Tribune report.

That was in line with Frey’s proposal: $1.20 per mile and 35 cents per minute.

In a letter to the council prior to the vote, Brent Kent, Lyft’s policy director, expressed “grave concerns” about the council’s proposed rate hikes. He said the proposal “reflects a lack of consideration of data or earnest engagement with industry participants” and “is not a workable solution.” Rider fares would increase to a point that “could make Lyft rides a luxury only the wealthy could afford,” and that would “undercut driver earnings by reducing ride volume.”

And, Kent noted, his company was already working with a state task force to develop recommendations for the 2024 legislative session. The council passed the ordinance anyway.

Grathwol said that to him the council’s actions seem “performative.”

It’s not the first time the Minneapolis council has shown a penchant for progressive performance — in January, the council’s first official act was to pass a divisive, virtue-signaling resolution calling for a cease-fire in Gaza and pointing blame at Israel for the violence in that region.

After the council overrode Frey’s veto on the rideshare pay rates, both Lyft and Uber notified drivers and customers that they would be leaving the city on May 1. While Lyft will no longer provide rides to and from Minneapolis, Uber has said it will “stop operating a transportation network in the entire metro area including the airport,” according to news reports.

Councilmembers and MULDA drivers believe the companies are making empty threats. And, they contend, even if Lyft and Uber do leave some other rideshare competitor, maybe a local startup, will fill the void. At least one state senator has floated the idea of creating a state-run rideshare service.

A clearly frustrated Tim Walz, Minnesota’s Democratic governor, accused the council of playing a “game of chicken” with Uber and Lyft that could leave Minneapolis residents in a lurch. He’s called for the council to reconsider its pay requirements, according to the Star Tribune.

“I don’t think it’s a plan to think somebody might step in,” he said. “That’s not really a plan.”

Minneapolis councilwoman Linea Palmisano, one of the three “no” votes on the ordinance, told National Review that she has no doubt Uber and Lyft will leave if something doesn’t change.

“They’re not bluffing,” Palmisano said.

“The amount of blowback here, I have not seen in quite some time,” she added. “There are 400,000 rides per week between these two apps in our metro area.”

John Phelan, an economist with the free-market Center of the American Experiment think tank, said he suspects Lyft and Uber will leave if the council doesn’t reverse course or if the Minneapolis ordinance isn’t overridden by the state. He called the revenue the companies get from Minneapolis a “drop in the ocean.”

The contention that the companies wouldn’t dare exit the Minnesota market is, Phelan said, “just all part of this ridiculous view that people in this state have that it’s some kind of paradise, only a fool would leave, despite the fact that people leave it in the thousands every year. And now these businesses will join them.”

“Downtown Minneapolis is already struggling with crappy business conditions. This will make that worse. There will be more DWIs,” Phelan added, noting that Lyft and Uber are part of Minnesota’s plans for extended public transit in the state.

Adam Duininck, the CEO of the Minneapolis Downtown Council, has been critical of the city council for not inviting Lyft and Uber leaders to the negotiating table, and for making unilateral decisions that affect the entire metro area. He called it “very wishful thinking” to expect some new company to replace Lyft and Uber without causing a “significant disruption to people’s lives.”

“I know there has been some chatter that some other rideshare service will materialize,” Duininck said. “But if Uber and Lyft, as capitalized as they are, can’t make this work financially, I find it hard to believe that some company can just dial up an app and then start providing reliable service to people.”

He said he also worries about the “huge reputational damage that gets done to our city at a time where we need more people thinking about visiting here and coming downtown, not less.”

‘An Absolute Chaotic Nightmare’

Dan Fragola was one of the nearly 400 Twin Cities Lyft drivers who signed a petition opposed to the city council’s ordinance. Fragola said he’s been driving for the company for almost five years — he  started driving as a side hustle to supplement his sales career, but made it his full-time gig last May. “It’s been a great decision for me,” he said.

He said any driver who is allegedly working 50 to 60 hours per week but only pulling in minimum wage or less is being “lazy,” probably waiting at the airport and walking around.

“I’m hustling. I’m always moving,” Fagola said, talking with National Review as he picked up a customer in the eastern suburbs. “I don’t make money unless there is somebody in my car.”

“I don’t feel like I’m under-paid,” he added. “The harder I work, it just works itself out.”

Ron Fulford, another Lyft driver, agreed, saying he’s reached higher performance levels within the company by taking pride in his customer service “and making sure the ride was pleasant and that the customer got to their destination safely.”

Fulford, a full-time personal coach, said he values the flexibility that driving for Lyft provides.

“I call it gap money,” he said of his Lyft earnings. “Sometimes I do it a lot, sometimes I don’t. Sometimes I’ll go eight hours, sometimes I’ll go two hours. Some days I don’t even drive.”

Fulford said he often receives tips from customers — “I got a $100 tip one time” — and he appreciates the rewards, benefits, and discounts he receives from Lyft.

Fulford said he worries that Lyft will leave Minneapolis, and potentially pull out of the rest of the Twin Cities. He understands that some of his fellow drivers are excited about getting a bump in their pay. “But if they pull out of Minnesota, then what do you do?” he asked.

He said he also worries about his customers who depend on the service. “You’ve got thousands and thousands and thousands and thousands of people who all of a sudden on May [1], that’s not going to be available no more, that’s going to be gone.”

Fragola believes there are strong incentives on both sides to reach an agreement: there’s money to be made by Lyft and Uber, and the government and residents need them to stay. It would be “an absolute chaotic nightmare” if the companies pulled out, he said.

“I’ve had people, the day after that are like, if this happens, I legitimately have to find a new job, because Lyft and Uber is the only way I get to and from work,” Fragola said. “You’re talking about people’s livelihood.”

‘I Don’t Get Angry’

With Lyft’s and Uber’s future in the Twin Cities in flux, Republicans and Democrats in the legislature have introduced bills to give the state control over rideshare regulations and pre-empt the Minneapolis ordinance.

Palmisano, typically a supporter of local-government authority, said she hopes the state takes over.

“I just hope they pre-empt us,” she said of the state. “That would solve it.”

Phelan is opposed to state pre-emption generally. For one thing, he said, he believes Republicans in Minnesota should use localism more to escape from the state’s leftward drift. He also argues that voters in Minneapolis need to feel the impact of their choices.

“Minneapolis gets bad politicians because people vote for them,” Phelan said. “Things will not get better until people vote for better politicians. And they will not do this if they are insulated from the consequences by state-government legislation.”

“It’s almost like you have to let it fail now, so people will see — keep voting for this, and see where it gets you,” he said.

Duininck said the proponents of the Minneapolis ordinance are framing it so that opposition to it is seen as opposition to Lyft and Uber drivers generally. “There is much more clearly a position in the middle where people support the drivers making more, but want it to be done thoughtfully that keeps the businesses here that we need to serve people,” he said.

Grathwol, a longtime lobbyist for Twin Cities schools, said he’s not angry about the council’s decision, which could strip his son of the Lyft rides he depends on.

“I don’t get angry,” he said. “I try and solve problems.”

“There are legitimate interests on all sides,” Grathwol said. “I happen to believe, and have a lot of experience, that reasonable people can solve problems.”

In a worst-case scenario, Grathwol and other family members can work together to get his son to his medical appointments, sobriety meetings, and college classes. He said his son can rely on a “cohesive and effective family unit” to help him, if need be.

“The tragedy,” he said, “is not everybody has that.”