Uber and Lyft leave Minneapolis over $15 minimum wage
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kstp.com
What am I missing here?
The problem here, as I see it, is that the model changed from being highly accurate (payment per mile, which can happen in a minute) to something more broad (payment per 15 minutes according to FLSA rules as I understand them).
FWIW I think this is posturing on Uber/Lyft's behalf, but is almost certainly a sign of future actions if they cannot make the number work.
Now they will get replaced by more traditionally run taxi companies that managers their drivers tighter.
Edit: Or no, the law explicitly said how much ride shares should pay per mile and per minute riding. So scratch that, not sure why they pulled out here.
This is a myth.
Disclosure: I work at Alto.
Hadn’t heard of Alto; looks neat. But the website seems to ambitiously evade disclosing their area of operation.
That said, it does look like ride-sharing in Minneapolis is headed for a members-only model [1].
[1] https://www.axios.com/local/twin-cities/2024/03/14/uber-lyft...
These are straight up taxi companies, not ride sharing. Uber, and Lyft, keeps sticking to "ride sharing" sales pitch, while running money losing taxi services. If they truly where ride sharing services, then they wouldn't be having these legal issues.
taxi services in the US have yet to roll out any type of for hailing rides afaik and have a fleet of vehicles with their own livery.
Don't NYC taxis have one? I vaguely recall there being something when I visited several years ago.
[note, I had to guess to fill in the blank for your comment, since it seemed like you dropped a critical word].
If you mean Uber/Lyft, no, we do not call them cabs in NYC.
I'm starting to think that ride sharing is just an area where you can have a profitable, sustainable company (taxis) but not the sustained, exponential growth a company like Uber is pitching. If Uber was happy to settle for paying drivers decent (but low) wages and operate at a sustainable level they would probably be fine, but that's a death sentence for a publicly traded company in their position.
I think it's proof that taxis weren't "an entrenched monopoly," or at least weren't as bad as the Uber's propaganda made them out to be.
If Uber's big innovation was just "pay workers less," and their competitive advantage evaporates once regulation catches up to them, it's just proof of how misleading SV smoke-and-mirrors can be.
I can tell you that I'm about as excited about the next "innovative" consumer-oriented startup as I am the next Google chat app.
Sure, a Taxi company operating in Minneapolis could be California owned and the profits would get funneled back to California too.
What would be better is if locally owned Taxi companies created their own ride sharing apps. Or even better, if the drivers themselves were able to create some kind of co-op company that managed the ride sharing application for them.
Ride share driver's aren't slaves. They chose to drive for ride share companies above the other options. If it was a bad deal then Uber and Lyft would be having trouble finding drivers. How is strictly fewer options a good thing?
This is exactly the kind of misguided take that leads people deprive people less privileged then themselves of employment opportunities. You wouldn't want to drive for Uber, it'd be a bad choose in your situation. And you're applying the same thinking to people who don't have the same employment prospects.
What will Uber and Lyft drivers do now that price controls have made ride sharing too expensive for most of the market? Work at fast food joints? In retail? All of those choice were present when drivers chose to drive for ride share companies, and the drivers concluded they were inferior to working for Uber and Lyft. Now, were forcing them to go to one of those inferior choices and patting ourselves on the back for doing a supposedly good thing.
I'm afraid most humans are not "choosing", at least not in the way many people on hackernews get to choose between various extremely-cushy white collars job.
Work = Survival We'll "choose" the best option available to use, and as the overall temperature of the market changes, so do our "choices"..
Not challenging you, but do you have evidence?
I remember in California drivers being famously against reform.
[1] https://www.mprnews.org/story/2023/05/25/walz-vetoes-bill-ad...
Again, legislators don't care if it's popular among the impacted party. They just care if it's popular among voters. Which are overwhelmingly not Uber and Lyft drivers.
I feel comfortable that this legislation is unpopular among Uber and Lyft drivers because they chose on their own accord to drive for these apps, and now they are deprived of that choice.
Check out what drivers are saying on the Minneapolis and Minnesota subreddits: https://www.reddit.com/r/Minneapolis/comments/1bfjyej/lyft_a...
I'm not 100% certain, but I think this is a workaround for Uber/Lyft's workaround that lets them violate employment laws, namely, that they claim their employees are contractors, not employees. Since the contractor agreement specifies payment per mile, that's what the council's ordinance applies to. If Uber/Lyft were honest about their employees being employees, then they would have the minimum wage law applied, like any other business.
Like it or not, Uber and Lyft drivers are indeed contractors. They set their own hours, and are free to work for competing ride share apps. There's nothing dishonest about this, people are just salty that the "Ride share driver are actually employees" meme is not true.
And slaves aren't slaves either, they chose to remain slaves above other options (rebel and be beaten or killed). If it was a bad deal, the slaveholders would be having trouble getting their slaves to work, and would just be killing or beating them all the time.
I find type of argument irksome. It basically ignores whatever the actual situation is with a blind assumption whatever the market does is the best (or at least better) thing and is therefore fine.
If you give a person terrible choices, and they pick the best of a bad lot, that choice doesn't excuse the situation. All Minneapolis did was mandate one those choices had to be better. The rest is up to Uber and Lyft, who chose to play hardball to keep exploiting their workers to the degree they've become accustomed.
> How is strictly fewer options a good thing?
Exploitative options aren't a acceptable.
Coercion is when you cannot reasonably refuse. If one faces torture and execution for refusal, then they cannot reasonably refuse.
Will Uber and Lyft tie up drivers and whip them if they choose to take a job at Starbucks? Whill Uber and Lyft kill drivers? Come on, you call my argument irksome then you compare these drivers to actual chattel slavery.
What's so clever about it is the threat is indirect and systemic (instead of direct and personal), which is all some people seem to need to deny it's there.
It also brings to mind the ancient Roman fire brigades, which were more of an extortion racket than anything else.
I didn't say it wasn't. But don't you realize the different social dynamic here from being a hunter gatherer? Uber and Lyft were exploiting that for their own gain, and ran away from the corrective action because they think they have the power to bully it away to maintain their gain at the level of which they've become accustomed.
> At this point, the definition of coercion has been expanded such that humanity's very existence is inherently coercive.
Only if you miss the point.
Whatever your response is, they had the opportunity to work that job before and made the deliberate decision to drive for Uber and Lyft instead. My point, that you're missing, is that there was no coercion in this decision between driving for ride share versus the alternative. And you're somehow trying to argue that depriving these drivers of the choice to work for Uber and Lyft and forcing them into the alternative that they previously judged an inferior opportunity is somehow a good thing.
Your point about people working to avoid starvation applies just as much to whatever job these ex-drivers are going to be working instead. These drivers judged that these jobs were worse than driving for ride share, but apparently you think you know better than them despite having zero knowledge about their priorities and life situation.
You edited your comment after my response:
> Uber and Lyft were exploiting that for their own gain, and ran away from the corrective action because they think they have the power to bully it away to maintain their gain at the level of which they've become accustomed.
How were Uber and Lyft bullying drivers? Again, you seem to be claiming that drivers were somehow coerced into driving for ride share apps instead of seeking alternative employment. But you've yet to explain how this bullying was perpetrated. What was Lyft and Uber doing to keep drivers from working at Starbucks or some other job?
The problem is (it appears) you're looking at this solely from the framework of free market dogma. The operation of market is assumed to be optimal, the Uber drivers had a nominal choice when they took a job with Uber, and that nominal choice cures any issue anyone could have with the terms of their employment, etc.
While seductive, that framework is oversimple, and misses much.
> My point, that you're missing, is that there was no coercion in this decision between driving for ride share versus the alternative.
I am not missing that point at all. In fact, I find that point exceedingly tiresome due to how often it's repeated. At it's core, it's an apologia for fully taking advantage of a man's desperation (which I reject), and then twists that into some kind of good deed, so someone can pat themselves on the back for it afterwards (which just adds insult to injury).
> How were Uber and Lyft bullying drivers?
What I was referring to is their attempt to bully the Minneapolis city government and other governments that may take action to give drivers a better deal.
> The operation of market is assumed to be optimal, the Uber drivers had a nominal choice when they took a job with Uber, and that nominal choice cures any issue anyone could have with the terms of their employment, etc.
> While seductive, that framework is oversimple, and misses much.
Except... it does? You're insisting that this misses the point, but you don't actually explain what is misses.
Again, what will these drivers be doing to make ends meet when Uber and Lyft leave Minneapolis? Guess what, they already had that choice before and decided that ride share was better. Maybe it was the flexibility, maybe it was the independence, who knows. But they all made the decision that other available employment was worse than driving.
True, these drivers were working to put food on the table. But they're still going to be working to put food on the table in whatever job they do after ride share apps shut down in Minneapolis. It's no less "taking advantage of man's desperation".
They're weaseling around minimum wage laws. In Minneapolis, the minimum wage is $15.57/hr (and tips don't count towards it, https://minimumwage.minneapolismn.gov/). Uber and Lyft are mad Minneapolis is going to make them pay drivers something close to that.
https://www.startribune.com/minnesota-uber-and-lyft-drivers-...:
> Uber and Lyft drivers in Minneapolis and St. Paul and greater Minnesota often are paid well below the equivalent of the minimum wage after expenses are deducted, a state-commissioned study has found.
> ...
> It largely validated the narrative of many drivers, who are considered independent contractors: After taking into account wear and tear on their cars, time spent driving to and from rides, and the cost of gas and other expenses, drivers across the state earn well below the minimum wage they would likely receive if they were employees, not including tips.
> However, before expenses, drivers are paid well above the minimum wage while working.
https://www.startribune.com/uber-lyft-msp-minneapolis-airpor...:
> Minnesota Uber, Lyft drivers say it's getting harder and harder to make a living...
> "It's not fair. What Uber pays us just covers our expenses but no profit at all," said Egal, who used to be a taxi cab driver for 15 years before Uber and Lyft disrupted the marketplace and his business.
> Again, what will these drivers be doing to make ends meet when Uber and Lyft leave Minneapolis? Guess what, they already had that choice before and decided that ride share was better. Maybe it was the flexibility, maybe it was the independence, who knows. But they all made the decision that other available employment was worse than driving.
It's a market right? It will adjust to find a new, better equilibrium.
A big assumption you seem to have is that these Uber/Lyft drivers are perfect examples of homo economicus, making fully informed rational decisions about all this, so think you can infer the choice is a good one for them because they made it. However that doesn't seem to be true. If those companies offer a misleading value proposition, they can sustain themselves for some time by with a revolving door of naive and ignorant people who don't understand the misleading economics of the exchange. The competition from that flow of ignorant people (especially if they're more casual) helps keep overall wages low.
I wouldn't be surprised of Uber and Lyft have implemented some gambling dynamics for their drivers. It would make sense to offer drivers occasional jackpot days to keep them hooked, while the house wins big as always.
Homo economicus is an oversimple fiction; Homo sapiens is real. Understanding the difference goes a long way towards grasping the problems with free market dogma (but certainly not the whole way).
Aren’t you a bit presumptuous? Do you consider yourself as knowing better than them what is best for them? Do you think that you know how to run their life better? Why?
Do you think there are people out there knowing how to run your life better than you? Would you like if they came and took control over your life?
When the options are narrowed into precarious work such as most (or even all) of the "gig economy" bullshit, have more options of precarious work is not good overall for a society. It erodes the standard employment relationship, it's cheaper for employers so companies not relying on precarious work are in disadvantage which pushes more people into precarious work, creating a death spiral to proper secure employment in more sectors of society over time.
But they can be some desperate people, who are willing to put up with inhumane working conditions just to survive. We, as a developed society, should have a floor on the working conditions. Otherwise, businesses will take advantage of the weakest members of the society to bring back practices like 9-9-6, peeing in the bottle at the warehouses, child labor and what not.
Regulations are the best defense against a race to the bottom.
A lot of immigrants will have drivers/maids/cooks in their country of origin, and then come to the US and have to do their own laundry/cooking/driving/etc.
I can compete with a taxi driver based on my existing skill set. I cannot with a lawyer or coder. This is basic supply and demand.
i.e.: once self-driving vehicles come onto the scene (as in ubiquitous) there won't be a labor force to worry about.
Couple this with a publicly traded company such as Uber/Lyft whose whole existence depends on market value (the stock price) then the management of those companies are going to do the math to figure out if automating jobs is the right thing to do: their job is to maximize the value of the company (the stock price). The shareholders also have a vested interest for the same reasons.
As for self-driving, I'd be a little concerned that a ~$8/hour cost (assuming previous was around $7) puts Uber in an untenable situation, self-driving cars or not. Ultimately there still would be labor force to worry about, no? Currently, drivers are responsible for maintenance, cleanliness, etc. -- once you switch to self-driving, someone else has to do all of that.
The business will do the math to figure out what they can get away with. Honestly there probably is a little political posturing here as OP said, but if they return it's because they made the math work, otherwise they'll stay gone.
Some more discussion last week when this was news: https://news.ycombinator.com/item?id=39711041
The market isn’t worth supporting at those rates.
It "not being worth supporting" has everything to do with signalling to other municipalities not to regulate (which I think makes much more sense for Uber to do than Lyft)
I can. They have to pay for when the drivers are earning revenue as well as not. At the same time, support the local infrastructure running a ride-hailing service requires (e.g. government relations, customer service, et cetera).
Minneapolis and St. Paul are not super wealthy cities.
Where are you getting this from?
"The ordinance requires rideshare companies to pay drivers a wage of at least $1.40 per mile, and 51-cents per minute on rides to, from, and through city limits."
I see nothing about paying them when they aren't earning.
If the previous prices really were bad wages, then Uber and Lyft would be having a hard time finding drivers.
The existence of a job doesn’t imply that said job is unexploitative. People are attracted to (or left with) exploitative jobs for all kinds of reasons.
These Uber and Lyft drivers picked this job out of all their options. They arrived at the conclusion that it was the best job that they could get out of all their options. Why do you think you know better than they do?
Edit: “out of all their options” reveals the point here: the minimum wage exists so that, in theory, there is a cap on the things that people have to do to put food in their mouths.
But the reality is Uber and Lyft drivers aren't idiots and do indeed realize that depreciation exists. This strikes me a quite a condescending take, that Uber and Lyft drivers aren't smart enough to o take wear and tear on their vehicles into account.
This is a long-standing point of public messaging around rideshares. It's not a secret; the reality is that the people who care about it aren't the ones with hundreds of millions allocated for advertising.
None of this assumes that Uber or Lyft drivers are stupid. Everybody discounts long-term externalities; it's a universal human trait, and it's why we have entire society-level issues that boil down to long-term discounting. The only thing that sets rideshare drivers apart in this particular case is that a company is actively exploiting that human weakness, and can do so in part because we allow economic privation as a fulcrum.
The fact that you're allowed to expense your car's deprecation indicates that this is not a long-term externality for you. Of course people take advantage of reimbursements available to them; the fact that none applies here is the thing being discussed.
Again: being "worth his or her salt" reveals the point here: the point of a minimum wage is to ensure that people who aren't financially literate are, in theory, afforded a baseline quality of life. It's fine if we don't agree about the civic value of that, but that's what it boils down to: not punishing people with a life of privation for not having the skills, means, or anything else that others have.
I stand by my point: the idea that a significant portion of ride share drivers are failing to account for depreciation is ridiculous.
There are clearly many people who both want to drive for these companies and want to rules in place to ensure fair pay and working conditions. It is not an either/or.
Nor have you. You have made the assumption that accepting the terms of employment implies that drivers accept/support the companies position in this conflict. I see no evidence for that.
This, too, is baseless. Plenty of people who aren't drivers support legislation like this. Neither the claim that most drivers support this legislation, nor the claim that this legislation has been mostly supported by drivers is substantiated.
EDIT: There are also loads of limitations on what contracts are valid. The government removes the option to contract yourself into slavery, as well as a host of other things. All these laws removing these options were written in response to exploitation, and I'm pretty sure you'd find that they actually reduced exploitation.
Correlation is not causation. It would be illogical to remove options and have less exploitation. When luck and free markets compensate for the removed options - great. A strong labor market with lots of employers is the best tool against exploitation. But here we are talking about a corrupted, monopolistic government-controlled market where there weren't many choices to begin with. New entrants should be encouraged and celebrated, not shunned and punished.
Minimum wage laws are incredibly damaging as well. For example, the unpaid part-time "job" that launched me in the IT field would be illegal now. And I would be much poorer for it. But, hey, I wouldn't have been "exploited".
It may be somewhat counterintuitive, but it's certainly not illogical.
> Minimum wage laws are incredibly damaging as well. For example, the unpaid part-time "job" that launched me in the IT field would be illegal now. And I would be much poorer for it. But, hey, I wouldn't have been "exploited".
First of all, are you sure it wouldn't have existed? Just because you're willing to get something for free doesn't mean you're not also willing to pay for it; and minimum wage is a lot cheaper than a properly trained full-time IT person.
Secondly, having skilled workers available is a public good [1] that benefits all companies, so it makes economic sense for the government to invest (on behalf of all companies) in developing those skills. If these sorts of apprenticeships are generally useful, then having the government sponsor or subsidize them also makes sense.
Please describe the mechanism then.
> are you sure it wouldn't have existed
I know it ended since I am still friends with the owner: the labor regulations become so onerous he gave up on having a couple overly-enthusiastic pain-in-the-butt kids around to train every year.
> having the government sponsor or subsidise them also makes sense
Of course government intervention begets ever more government intervention - it's the only one that can fix the messes it creates. But I lived under a regime where the government controlled everything - and we were starving.
The government is the most incompetent, slow and corrupt organization built by man. It makes sense, as it has no competition to push it to be otherwise - it's the ultimate monopoly. Boggles the mind that somebody would voluntarily rely on it.
There is a massive difference between people of equal power making arms-lencgh transactions, vs people of virtually unlimited power coercing others to work for sub-poverty wages when their only other option is starvation.
Minimum Wage and Unions work against the tendency for capital, owners, and management to exploit workers for their own gain. History shows societies with a large middle class are far better off and more resilient than societies with a thin upper class and mostly impoverished workers.
Whenever workers for a company are disproportionately reliant on public assistance, as was found in MN, it means that the management has figured out a scam to get rest of the taxpayers to subsidize their business.
The taxpayers make up the difference between what is paid vs a living wage which would be required for those workers to sustainably work for the corp, and the management/shareholders pocket the difference. So, Uber and Lyft are literally scamming the rest of the taxpayers for their profits. Do you enjoy paying taxes to support the executives and shareholders of Uber and Lyft (also WalMart, etc.).
There are several solutions, including:
Solution 1: Reset the minimum wage the way it was originally designed (by 1950s Republicans), so that it pays a livable wage for one person working 40 hours to support a family of 4 above the poverty line. This is what built the middle class.
Solution 2: Tax any and all automation sufficiently to pay a Universal Basic Income above the poverty level so that people have options and do not need to work unless an employer makes it worth their while to undertake the commute, etc. Actual minimum wages may be lower, but the corp taxes will be higher.
Either way, we are the wealthiest society in the history of the planet. We CAN afford to treat everyone with dignity, which includes providing for their basic needs of food, housing, healthcare when they work a full-time job.
Allowing some to exploit others in a coercive semi-slavery arrangement should not be an option in the most wealthy society in history.
First:
If all minimum wage did was remove opportunities, we wouldn't have one in most of the civilized world. It's plainly obvious that isn't all it does, regardless how you feel about it's effectiveness.
Second:
Minimum wage does remove opportunities - and so what? There's nothing inherently bad about that. If a business can't afford a minimum wage, then they aren't a viable business. Businesses don't deserve to exist in the same sense that jobs don't deserve to exist. A business that can only survive by trapping employees in wage-slavery isn't to the happiness and health of it's society.
Third:
Minimum wage has little to no effect on inflation: https://www.sciencedirect.com/science/article/abs/pii/S01651...
And it does have a positive effect on the quality of life of low-skilled workers: https://www.healthaffairs.org/do/10.1377/hpb20180622.107025/
People that argue against the merits of a minimum wage are usually:
- parroting something they heard from a right-wing talking head, (i.e.: they have no evidence to back their claims), or
- they are a business owner that knows their business can only survive if they prey on low-skilled labor
San Francisco is richer. That lets it support higher prices.