ST. PAUL, Minn. (The Daily Reformer) – Minnesota Uber and Lyft drivers would be guaranteed a significantly higher minimum wage — after accounting for their expenses — than that promised to all other workers like janitors, fast food workers, and school bus drivers under a bill supported by Democrats at the state Legislature.
Sen. Omar Fateh, DFL-Minneapolis, on Tuesday proposed minimum pay rates of $1.39 per mile and 49 cents per minute for Uber and Lyft drivers as part of a larger package of labor regulations on the two tech giants.
The bill aims to address drivers’ longstanding complaints of meager and unpredictable pay, much of which is eaten up by the cost of maintaining their cars and paying for gas.
But the bill goes beyond ensuring drivers earn at least the state’s minimum wage of $10.85 an hour, or even the city of Minneapolis’ minimum wage of $15.57 an hour after accounting for their expenses, according to a new state study.
The Minnesota Department of Labor and Industry commissioned the largest independent study of Uber and Lyft driver earnings ever conducted, based on the more than 18 million trips taken in the state in 2022.
The report’s authors estimate drivers in the Twin Cities metropolitan area — where 95% of Uber and Lyft trips in Minnesota happen — need to earn 89 cents per mile and 49 cents per minute to earn the Minneapolis minimum wage after paying for vehicle expenses. That’s 50 cents per mile lower than Fateh’s proposal.
Drivers in the Twin Cities area, who earned $30.27 per hour on average before tips and expenses in 2022, would see a 10% pay increase under rates proposed in the state report.
The researchers — economists James Parrott of The New School and Michael Reich of the University of California, Berkeley — also came up with a second, higher estimate for a minimum rate of $1.20 per mile and 49 cents per minute that would ensure drivers could afford comprehensive benefits including paid sick leave, paid family and medical leave, retirement, health insurance and unemployment insurance.
In greater Minnesota, the researchers found drivers would need to be paid a higher rate even though they currently earn significantly less on average and have a lower cost of living. That’s because they spend significantly more time driving to pick passengers up or waiting to accept fares. Fateh’s proposal takes the recommendations for greater Minnesota and applies them to the entire state.
“We plugged these in based on the data that was presented within that report,” Fateh told the committee.
The proposed rates are slightly lower than those passed by the Minneapolis City Council a day before the analysis was released. Mayor Jacob Frey vetoed the ordinance, though the council may override him. Uber and Lyft have said they will pull out of the city if the Minneapolis rates — $1.40 per mile and 51 cents per minute — go into effect.
The rates also aren’t much different than those Fateh proposed last year — although his previous bill had lower minimum rates for drivers in greater Minnesota.
Both companies have sharply criticized the report, saying the researchers have overestimated the costs of being a driver.
The bill gives Fateh a chance to make good on a promise he made to drivers to pass a bill that Gov. Tim Walz will sign into law. Fateh told drivers last year that Walz had committed to signing the bill last year, though Walz’s office says he made no such commitment.
Walz issued his first and only veto to kill the bill over concerns the minimum rates were too high and the protections against terminations — called “deactivations” — too stringent for the companies.
Walz instead created a task force to make recommendations on regulations and for the state labor department to conduct an analysis of driver earnings. The task force was made up of drivers, company representatives, other stakeholders and House Majority Leader Jamie Long, DFL-Minneapolis. Fateh was appointed to the task force but never attended.
The task force adjourned without making a recommendation on minimum wages, in part because the analysis of driver earnings hadn’t been finalized.
Nicole Blissenbach, commissioner of the Department of Labor and Industry, signaled the Walz administration does not have the appetite to set minimum wages higher than those proposed in the report or that would lead Lyft and Uber to threaten again to leave the state.
“The administration is committed to engaging with stakeholders and authors to build agreement on a pay standard that is supported by the report,” Blissenbach said during Tuesday’s hearing. “I fully believe that with time and effort put towards building stakeholder agreement, we can get to a bill that has broad support.”
The task force did make a host of recommendations — albeit often vague ones — on deactivations, driver support, pay transparency, insurance and enforcement.
Fateh’s bill goes beyond the recommendations made by the task force, sets up a second round of fights this year between drivers, the companies and Democrats over how to regulate discipline and insurance requirements for the companies.
The bill was passed on a voice vote and referred to the Senate Commerce Committee.
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