Lessons from Texas as Uber and Lyft threaten to leave the Twin Cities like they did there
Updated: 3:36 p.m.
Uber and Lyft are threatening to stop service in the Twin Cities. And they’ve done it before in Austin, Texas — only to return a year later.
The Minneapolis City Council on Thursday overrode a veto by Mayor Jacob Frey on an ordinance guaranteeing rideshare drivers a boost in pay and protections beginning May 1. While it’s a boon for drivers, the rideshare companies argue the cost is too high.
In an email sent to all Lyft riders and drivers in Minneapolis, Lyft said it “will be forced to stop offering rides” that start or end in Minneapolis beginning May 1.
“The Minneapolis City Council passed an ordinance that would make rides on the Lyft platform unaffordable for the majority of Minneapolis residents,” the statement read. “This drastic drop in rides means the thousands of drivers who rely on the platform for earnings will ultimately earn less, creating an unsustainable situation for our customers.”
Create a More Connected Minnesota
MPR News is your trusted resource for the news you need. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.
While other cities states have raised driver pay, it was only Austin in 2016 where Uber and Lyft opted to leave. There, however, their departure was prompted by the city council approving a measure requiring drivers to submit to fingerprint background checks, which could reveal criminal records. Texas lawmakers later signed off on a law putting rideshare regulation under state, not city, jurisdiction.
Sergio Avedian, with the website “The Rideshare Guy,” believes Minneapolis’s fate will be different.
“I’m pretty sure a lot of passengers are going to get stranded,” Avedian said. He pointed to a study, ordered by Gov. Tim Walz, which recorded 18 million rideshare trips in the metro in 2022. “Obviously, the cabs are not going to replace the Uber and Lyft demand that exists.”
Avedian believes with more than a month until the ordinance’s start date, there’s hope for negotiation. Without an agreement, Lyft says it will end service in Minneapolis; Uber plans to cease operations in the entire metro area.
Walz joined Frey this week in condemning the ordinance. He instead suggested a statewide solution might be the answer, which is up for discussion at the Legislature. Last Spring, Walz vetoed a bill setting minimum pay requirements and enhanced protection for drivers.
In the interim without Uber and Lyft, smaller companies cropped up in Austin, Texas, to meet demand — though they were later undercut by the duopoly. Avedian believes something similar could happen in the Twin Cities within a few months.
“It’s not an easy thing to do. Obviously, they have to onboard a lot of drivers and they have to onboard all the passengers. I don’t think it will reach the scale immediately,” he said.
Clarification (March 15, 2024): This story has been updated to add a statement from Lyft.