Just last month, Seattle’s disastrous attempt to enact a minimum wage for drivers who deliver food via apps it was in the news. The result was a $26 coffee, city residents canceling their delivery apps, and drivers themselves seeing their earnings cut in half. Now, the Minneapolis City Council has decided to do just that join the fray in the multi-front progressive war against the gig economy – and this time the outcome could be even worse.
In March, the Minneapolis City Council enacted a order which creates a living wage for ride-sharing drivers in the city. It does this via a per-minute and per-mile calculation, which is currently set to at $1.40 per mile and $0.51 per minute. It also sets a minimum limit of $5 if the trip is short and the cost would otherwise be less than that level.
Advice affirmations enacted the ordinance to ensure that ride-sharing drivers in the city were paid an amount similar to the city’s $15.57 per hour minimum wage. Even putting aside traditional economic arguments against the minimum wage, see California’s recent fast food minimum wage law as Exhibit A: the Council’s logic fails on its own terms. The day after the city council initially approved the ordinance, the state Department of Labor and Industry released a relationship demonstrating that a lower rate of $0.89 per mile and $0.49 per minute would be enough to pay the driver a minimum wage of $15.57.
Accordingly, the ordinance was immediately issued vetoed by the liberal mayor of Minneapolis: for the second time in two years the mayor vetoed this proposal to measure by the council, only for the council to then override the veto a week later. Although the board did not have access to the state’s report for the first vote, it had more than a week to review it before the veto override vote. Incredibly, even a member of the city council suggested that the state’s report somehow convinced her to change her vote from “no” to “yes” on the minimum wage between the initial vote and the override vote.
In response to the council’s decision, ride-sharing companies like Uber and Lyft did so announced are planning to withdraw from the Minneapolis market entirely unless the council reverses course. The ride-sharing companies were originally supposed to leave the city on May 1, when the ordinance went into effect, but after a last-minute agreement by the council to delay the ordinance’s effective date to May 1 July, ride-sharing companies are waiting for “e-see” mode.
If the council refuses to back down by July, it will cause even more profound consequences for city residents than the rising food prices Seattleites have seen in the wake of the aforementioned minimum wage increase for workers delivery drivers. Ride-sharing companies indicated they would do so support Despite the minimum compensation levels proposed in the state study, the city’s higher rates are cost-prohibitive.
Panic has spread among many lawmakers in the state capital, with some calling for reform Legislature to anticipate the Minneapolis ordinance. Democratic Gov. Tim Walz, who previously vetoed a state version of the minimum wage I count for ride-sharing drivers, ha declared that he is “deeply concerned” about the prospect of losing ride-sharing services in the Twin Cities.
The concern is well-founded as a withdrawal of ride-sharing would disproportionately impact the city’s elderly and disabled residents who often rely on these services to survive. As a result, supporters of the Minnesota chapter of the National Federation of the BlindTHE Minneapolis Advisory Committee on Agingand the Minneapolis Advisory Committee on Persons with Disabilities all expressed opposition to the ordinance.
The possibility of losing ride-sharing has also been created worry on the potential impact on the city’s drunk driving rates. The evidence has connected the availability of ride-sharing to reduce incidents of drunk driving and alcohol-related road accidents, underlining how high the stakes may be.
Furthermore, if the City Council’s move goes unchecked, the deleterious minimum wage increases will inevitably spread to other parts of the Twin Cities’ gig economy. Minneapolis’ ordinance is limited to ride-sharing drivers currentlybut if the past is prologue, food delivery drivers will be next.
Seattle passed a minimum wage rule for ride-sharing for the first time drivers in 2020, and then continue with this year’s minimum food delivery fee. New York City also followed a similar two-phase trajectory blocking minimum rates for ride-sharing drivers before moving on to food delivery motorists years later. Since many drivers share the ride Double as food delivery workers, often on the same app, the progressive pressure to expand the minimum wage on delivery can be substantial.
Also of note is that the Minnesota Legislature is considering it a bill that would make it harder to be classified as an independent contractor in the state, creating even more ominous storm clouds on the horizon for temporary work.
Despite new lessons learned from Seattle’s food delivery disaster, Minneapolis council members appear oblivious to the reality on the ground. Ironically, it was Karl Marx himself who declared that history repeats itself “first as tragedy, then as farce”. The city council, which contains several openly socialist members – should pay more attention to its intellectual forebear.