Commentary: The Ride Hailing Service Rollercoaster in The Twin Cities

Lyft and Uber almost became non-existent on the streets of Minneapolis. 

Back on March 15, the city of Minneapolis passed a minimum wage law specifically for drivers working with both ride hailing apps that will go into effect May 1. That pay increase does not match up with the pay structure of two such services – among the largest in the world.

Lyft and Uber announced that they would cease operating in the city of Minneapolis. The two ride hailing juggernauts stated they would not match the city’s imposed $1.40 a mile/$0.51 a minute/$5.00 a ride wage schedule. At the time of the passing of the city’s ordinance, Lyft and Uber drivers make below those figures.

Uber made a statement that said the new ordinance would put “10,000 people out of work and leaving many stranded” across the Twin Cities. By leaving the city – and, on a larger scale, the state – Uber would not be able to operate in and out of the Minneapolis-Saint Paul International Airport, as well within the cities of Minneapolis and Saint Paul. Lyft would simply not service the city of Minneapolis, but they would operate out of MSP. 

In the meantime, Minnesota Governor Tim Walz worked to retain both services at full capacity. He hoped that the Minneapolis City Council could work out a compromise towards that solution. Rather, have the state legislature come up with a proposal affecting their services within the state. 

Prior to adjourning for their recess in May, the state legislature passed the bill to keep Lyft and Uber in Minnesota. It took a driver pay compromise to get it done. That compromise would set driver’s pay at $1.28 a mile and $0.31 a minute. 

Nonetheless, we will continue to be serviced by the two largest ride-hailing services beyond the July 1 date. However, the threatened departure of Lyft and Uber spawned the positioning of some new ride hailing competitors to the Twin Cities. 

For example, two new ride-hailing app services were waiting in the wings to replace Lyft and Uber in (at least) Minneapolis. Wridz and MyWeels recruited drivers to drive for their services in anticipation of Lyft an Uber’s departure from this market. They even enabled their apps to start fielding potential customers in completion with the established ride hailing companies. 

While ride hailing services could expand in the state’s biggest metropolitan area, one cannot forget that licensed taxicab operators and drivers continue to compete with them. Years ago, some of the local taxicab services created a ride hailing app called iHail. It was. Away for the established taxicab services to try to regain business from the likes of Lyft and Uber. 

People who use ride hailing apps and taxicabs are pipped for choice. There is a sense that the “wild west” mentality of companies such as Lyft, Uber, Wrids, and MyWeels may have settled into a form of normality that prompted state and city governments to get involved with legislation and ordinances to keep these services going for the many residents and tourists who use them. 

People like the convenience of using an app on the phone to get from Point A to Point B. They also like the ease of use the ride hailing apps provide. Using a credit or debit card securely stored in the app to pay for these rides is the biggest reason why these services are very popular anywhere they operate. 

Why was this fight to retain Lyft and Uber in the state of Minnesota important enough to get the legislature in Saint Paul involved? Perhaps to keep tax revenue slowing into the state’s coffers? Maybe to keep people moving by using a customized point-to-point personalized service?

If you ask me, it is the transportation infrastructure in the state’s largest metropolitan area that is a concern. The Metropolitan Council, along with its largest transit service – Metro Transit – continue to operate less than 100% capacity compared to before the pandemic. The pandemic also exposed some deficiencies within the system, including an increase in safety concerns on transit vehicles and stations. 

Ride hailing services are seen as safer and more secure than riding on transit. That’s the perception based on a reality that was rooted in the pandemic. With ridership growing at Metro Transit, they are trying their best to tackle unresolved vagrancy and violent criminal acts – both of which increased through and after the pandemic. 

Maybe that’s the reason why the pay compromise had to come into play to keep Lyft and Uber in the Twin Cities and in key markets across Minnesota. To enable these services for the safety and security of transporting people to where they need to go. It may not seem equitable, but retaining established and successful modes of transportation in this region are very important right now and moving forward.

Photos by Randy Stern