September 2023 | Volume 15, Issue 2

Read the full article from ABC News.

According to the article, Minneapolis' mayor recently vetoed minimum wages for Uber, Lyft and other ride-hailing drivers, a move one City Council member described as “an inexcusable betrayal of Minneapolis workers.”

Mayor Jacob Frey instead negotiated with Uber, securing an agreement for higher pay for only those drivers.

In his veto message, Frey wrote he “secured a commitment from Uber” that drivers picking up passengers in Minneapolis or driving within the city will make the city’s minimum wage of $15 an hour. The company also committed to paying Uber drivers at least $5 for any trip in the metro area.

Lyft drivers are not covered by the mayor’s deal.

Under the ordinance Frey vetoed, all ride-hailing companies would be required to pay drivers at least $1.40 per mile and $0.51 per minute, or $5, whichever is greater. The rule would only apply for the portion of the ride within the city.

Seattle and New York City have passed similar policies in recent years.

"It’s clear we need more time to get this right,” Frey said in a recent statement. “In the coming weeks, we will work in partnership with all stakeholders to do our homework, deliberate, and make sure we put together an ordinance that is data-driven and clearly articulates policies based on known impacts, not speculation.”

Minneapolis City Councilmember Robin Wonsley slammed Frey as “ready to abandon any commitment to living wages or workers’ rights under the pressure of lobbying by multibillion-dollar out-of-state corporations.”

“This veto is an inexcusable betrayal of Minneapolis workers,” Wonsley said in a statement. “The ordinance was developed over eight months of consultation with drivers, city staff, and national experts.”

Many of the drivers are African immigrants who have been pushing for higher wages at the state and city levels for several months.

Frey previously asked the City Council to wait until the end of the upcoming Minnesota legislative session to act on a Minneapolis ordinance in hopes lawmakers instead will pass a statewide plan for ride-hailing drivers.

Eid Ali, president and founder of the Minnesota Uber and Lyft Driver's Association, said “pushing this issue to the state isn't an excuse.”

“He has a responsibility to his constituents who are part of those folks who are suffering,” Ali said.

In May, Minnesota Democratic Governor Tim Walz vetoed a bill that would have mandated higher pay and job security for Lyft and Uber drivers in the state. Walz said at the time that ride-hailing drivers deserve fair wages and safe working conditions, but it wasn’t the right bill to achieve those goals.

Ride-hailing drivers, like other gig economy workers, are typically treated as independent contractors not entitled to minimum wages and other benefits and must cover their own gas and car payments.

Uber and Lyft both opposed the Minneapolis measure.

Lyft spokesperson CJ Macklin in a recent email said the company no longer is planning to leave the city.

“By attempting to jam through this deeply flawed bill in less than a month, it threatened rideshare operating within the city,” Macklin said. “We support a minimum earning standard for drivers, but it should be part of a broader policy framework that balances the needs of riders and drivers.”

Uber has said the Minneapolis ordinance would have meant drivers ultimately earn less because of increased costs and instead pushed for a “broader statewide solution that also protects driver independence.”

“We appreciate Mayor Frey’s thoughtful approach and the opportunity to continue working together to get this right and hope the Minnesota legislature quickly passes a statewide compromise in February," the company said in a recent statement.

Discussion Questions

  1. What is the “gig economy?”
    According to Investopedia, “A gig economy is a labor market that relies heavily on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees.

    Gig workers gain flexibility and independence but little or no job security. Many employers save money by avoiding paying benefits such as health coverage and paid vacation time. Others pay for some benefits to gig workers but outsource the benefits programs and other management tasks to external agencies.

    The term is borrowed from the music world, where performers book “gigs” that are single or short-term engagements at various venues.”
  2. Do you support the position of Minneapolis Mayor Jacob Frey in this case, or do you support the proposed ordinance Mayor Frey vetoed? Explain your response.
    This is an opinion question, so student responses may vary.

    Your author supports the proposed ordinance Mayor Frey vetoed. As the article indicates:

    “Under the ordinance Frey vetoed, all ride-hailing companies would be required to pay drivers at least $1.40 per mile and $0.51 per minute, or $5, whichever is greater. The rule would only apply for the portion of the ride within the city.”

    Without further information, your author cannot hypothesize why Mayor Frye would negotiate a deal with Uber without securing an agreement with other ride-hailing companies.
  3. In terms of establishing a minimum wage for workers, is that best addressed by each municipality, each state, or the federal government? Explain your response.
    This is an opinion question, so student responses may vary.

    In your author’s opinion, ideally the minimum wage issue would be best addressed by the federal government, with a “built-in” cost-of-living adjustment that would account for inflation year-to-year (like the cost-of-living adjustment for Social Security). That has not happened. The federal government has not addressed (increased) the minimum wage since 2009, meaning that the current minimum wage of $7.25 per hour has not changed for approximately 14 years!

    At the state level, although 30 states have minimum wages above the federal minimum wage of $7.25 per hour, this means that 20 states do not. Numerous municipalities have increased the minimum wage within their jurisdictions, with 48 setting a minimum wage higher than the applicable minimum wage in their state. This is designed to account for a higher cost of living in urban areas.