The battle between ride-hailing companies and city governments over driver wages has reached a boiling point in Minneapolis, as both Uber and Lyft have threatened to pull out of the city following a City Council vote to guarantee a minimum hourly wage for drivers. The ordinance, which requires ride-hailing services to pay drivers a minimum rate of $1.40 per mile and 51 cents per minute to ensure they earn at least $15.57 per hour, was first approved last week but was vetoed by Mayor Jacob Frey. The council voted 10 to 3 to override the veto, leading both companies to announce their plans to cease operations in Minneapolis when the law takes effect on May 1.

Lyft called the ordinance "deeply flawed," arguing that it would make rides unaffordable for the majority of Minneapolis residents. Uber did not immediately respond to a request for comment but issued a statement expressing similar concerns. Both companies have pledged to push for statewide legislation that could overturn the Minneapolis ordinance. State House Republicans have already proposed a bill that would preempt local regulations of ride-hailing services.

Critics of the ordinance fear that costs will increase for riders, including those with low incomes and disabilities who rely on ride-hailing services. However, supporters, such as City Council member Jamal Osman, argue that the services have been relying on drivers from low-income and immigrant communities for cheap labor. Governor Tim Walz, who vetoed a similar bill last year, expressed concern over the potential impact on disabled individuals who rely on ride-hailing services. He urged the Legislature to seek a compromise that ensures fair pay for drivers while also preventing the companies from leaving.

The tension between gig economy workers and companies like Uber and Lyft is not unique to Minneapolis, as other cities and states, including New York City, Seattle, Washington, and California, have implemented minimum pay standards for gig workers in recent years. The outcome of the battle in Minneapolis could set a precedent for how other cities address the issue of fair pay for gig workers in the future.