Legislature must act — properly — on Uber and Lyft before adjourning

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The Minnesota Legislature is set to adjourn in about a week. If it does so without repairing the damage inflicted on our region’s businesses and reputation by the Minneapolis City Council pushing out Uber and Lyft, the negative impact will be dramatic.

Unfortunately, legislation considered by Minnesota House and Senate committees this week went in the wrong direction. While the ordinance passed earlier this year by the City Council would cause ridesharing companies to leave Minneapolis or the Twin Cities region, the current bill at the State Capitol would force them to withdraw from the entire state. Both versions would make rides unaffordable for most people, reducing usage and making ridesharing services unsustainable.

Every day I receive multiple calls from operators in our restaurant, hotel, nightlife and hospitality industries, concerned about the dropoff in business that will occur and difficulties their employees will have getting to and from work without ridesharing.

We also hear from convention planners who are considering bringing thousands of people and dollars to our state, but they’ve worried about the idea that participants will arrive at Minneapolis-St. Paul International Airport, only to find that they can’t take a rideshare to their hotel. Case in point — WrestleMania 41 recently chose another market after it had practically committed to our region.

Lyft and Uber provide approximately 400,000 rides per week in our region. Some have suggested that new companies could step in to fill the void, but this is not realistic. Establishing new ridesharing operations with the same level of safety, security, scale and efficiency as Lyft and Uber is a monumental task that will not be accomplished by July 1. The hit to our economy, and the ripple effects on workers across our market, will be serious.

It’s important to understand the facts surrounding driver earnings and proposed pay mandates. Contrary to misconceptions, drivers currently make roughly double the city of Minneapolis minimum wage of $15.57 an hour, with a state report showing earnings of approximately $30 an hour before expenses. Keep in mind that the state and city don’t factor in expenses against earnings when calculating wages for any other category of employee.

That said, Lyft’s rate study demonstrates drivers typically earn between $22 and $25 per hour after expenses, accounting for variations across markets. Proposed pay rates in the state study of 89 cents per mile and 49 cents per minute far exceed minimum wage requirements and translate to a significantly higher rate — one that the state’s study estimates will increase driver earnings by 17%.

There are also basic economics at play. Mandated pay increases translate to additional costs, which inevitably lead to fare hikes. Higher fares that would result from the $0.89/$0.49 rate in the state study, which the rideshare companies have said they are willing to commit to, would result in an estimated 30% drop in ride volume, as riders adjust to increased costs. Fewer rides translate to fewer income opportunities for drivers, not more.

Ridesharing isn’t a luxury; for many, it’s a lifeline. In areas with limited public transportation, ridesharing fills crucial gaps, ensuring that people can get to work, school, medical appointments and essential services. It’s a vital link for low-income communities, where the majority of rides begin or end, and for disabled individuals who rely on Lyft or Uber to access employment and necessary facilities.

We cannot afford to stand by and allow this transportation option to disappear. A University of Toronto study tracking downtown activity in major markets across North America recently showed that Minneapolis ranked No. 1 in increased foot traffic over the past year. Eliminating ridesharing could kill that momentum.