The newly installed CEO of Lyft, David Risher, has a contract that enables him to earn as much as $980 million if he can raise the value of the company’s stock.
Last year, Dara Khosrowshahi, Uber’s chief executive, took home $24.3 million, an increase over the year before, according to company filings.
Meanwhile, the city council of Minneapolis decided that as of May 1, 2024, all ride-hail drivers who feed the fortunes of Lyft and Uber should be paid a minimum of $1.40 per mile and $0.51 per minute. No driver should get less than $5 per ride, Minneapolis said. (Many people who use Uber and Lyft regularly probably assumed drivers made at least that much, anyway.)
In response to that pay increase, both Uber and Lyft have announced they are quitting Minneapolis.
Jamal Osman, one of the city council members who supported the new pay rule, wrote on social media, “Drivers are human beings with families, and they deserve dignified minimum wages like all other workers. … The Minneapolis City Council will not allow the East African community, or any community, to be exploited for cheap labor.”
In its official response to the pay increase, Lyft stated, “While proponents claim the ordinance would increase driver earnings, drivers would in fact earn less due to fewer ride requests.”
But that’s not what other ride-share companies think. Steve Wright, the founder and CEO of the subscription-based app Wridz, was quick to announce his company would be more than eager to fill the gap left by Lyft and Uber—and would pay drivers a living wage.
“If we got the approval that we need from the city and from the state level, we could be in there in a matter of two weeks starting to onboard drivers,” Wright told local TV station KARE.
That eagerness was echoed by another rival ride-hailing service, Empower, which does not currently operate in Minnesota.
“We’re fully confident that should Uber and Lyft leave, there will be no interruption in the services with respect to ridehail services that are provided by drivers,” Empower CEO Joshua Sear told KARE, adding that about 200 people have already signed up to drive in Minneapolis should the company start offering services there.
Given the eagerness of competitors to flock to Minneapolis to replace Lyft and Uber, perhaps the issue is not about the market but about oversized “disruptor” apps with financial structures that only function if workers are paid less than a living wage.
It’s worth noting that Minneapolis is not the only place to have mandated wage minimums for ride-share drivers. In 2022, Washington State required ride-hail drivers to be paid $1.17 per mile and $0.34 per minute with minimum pay of $3 for each trip.
Despite those increases—which were similar to the changes mandated by Minneapolis—Lyft and Uber still operate in Seattle.
In New York City, drivers went on strike multiple times to achieve minimum wage standards in 2023. Uber sued to stop the wage increase, but the company’s effort failed—and neither Uber nor Lyft packed up and left town there, either.
In fact, Uber and Lyft were forced to pay a combined $328 million settlement in New York following allegations of wage theft. The huge payout also came with a requirement to provide paid sick leave for drivers in New York State.
Rather than see their workforces gain power in more states, Lyft and Uber are trying to scare local governments into backing off.
In Minneapolis, the saber-rattling might work. The city council may reconsider the measure in another vote on April 11.
I hope the city doesn’t reverse course. Seattle and New York have already proved that despite the protests—and aggressive political lobbying—by Uber and Lyft, labor fairness and minimum wages for drivers with ride-hailing companies can work.
Besides, the issue of a living wage is not going away. Month by month, the national issue of fair pay is only growing more important to voters of both parties.
The big ride-hailing apps have already been accused of placing massive burdens on the shoulders of workers—requiring them to furnish their own vehicles and gas, denying them paid sick leave, taking an ever-increasing percentage of earnings, dodging full health insurance benefits, being notoriously opaque about fees subtracted from worker pay, and allegedly underpaying drivers again and again. The companies also get away with hiding fees and surcharges from customers and drivers alike.
If Lyft and Uber cannot figure out how to employ drivers full-time without giving them a living wage in return, perhaps the companies should look at their own executive compensation first.
There’s a new fleet of ride-share apps waiting in the wings to prove that community-based labor doesn’t have to exploit workers to work.
The old “disruptor apps,” now gone public and gone to seed, are failing to provide for the people who power them. The disruptors are in danger of being disrupted themselves, and they’ll deserve it.
If you have to underpay workers to function, your business is a moral failure.
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