Max Nesterak/Minnesota Reformer
If you want to understand what’s fueling the drive at the state Legislature to enact minimum pay rates for Uber and Lyft drivers, hang out for a while at the airport waiting lot. You’ll find scores of drivers idling in between fares eager to recount stories of the companies charging customers $100 but only giving them $25.
“Uber and Lyft are ripping off customers and the drivers,” said driver Mohamud Abdi. “It’s not fair.”
Abdi says he earns less than $10 an hour after paying for gas, insurance, oil changes and the monthly payment on his $64,000 2022 Toyota Highlander (fully loaded).
Driver Yusuf Abdullahi says he sometimes only makes $2 an hour.
“This is like a casino. One hour you can make $100, one hour you can make $5,” Abdullahi said. He wasn’t sure how much he earned on average.
But other drivers, who haven’t marched through the Capitol or the Minneapolis City Hall over the past year and a half, say it’s a living — and a decent one. They worry the minimum pay rates proposed by city and state lawmakers are too high and will lead the companies to leave or jack up prices.
“When they say that they’re only making $10 an hour or $15 an hour after expenses, I want to know what they’re doing because I make a lot more,” said driver Sue Rasschaert, who contacted the Reformer after reading about the ongoing debate.
Rasschaert gave up driving a taxi for Uber nearly six years ago. She usually gets on the road around 4 a.m. when the pay is higher and pulls in about $22 an hour after paying for her 2021 Honda CRV and its maintenance.
She shared her weekly Uber earnings summaries, which show she earns about $30 an hour before expenses — in line with a state analysis of driver earnings.
Full-time driver Loren Balazs says he earns between $18 and $22 an hour after expenses, which he keeps low by driving a used 2015 Jeep Patriot and taking advantage of the perks from the companies like 7% cashback on gas. Balazs says by keeping his costs lower than the federal mileage rate he deducts from his income — currently 67 cents per mile — he’s also able to save on taxes.
“I make a good living, regardless of what most of the narrative is,” Balazs said.
As the legislative session enters its final days, lawmakers are engaged in a high-stakes negotiation to enact minimum pay rates and other worker protections.
The companies say they’ll pull out of Minnesota if lawmakers enact their current proposal of $1.27 per mile and 49 cents per minute when driving passengers, which is above what the state analysis estimates is necessary to guarantee drivers the Minneapolis minimum wage plus benefits after accounting for expenses.
The issue has polarized state Democrats. Many lawmakers worry that the companies’ departure would lead more than 10,000 drivers to lose income, while 1.5 million or more Minnesotans and visitors per month struggle to find rides to and from the airport, bars and sporting events as well as doctors appointments, drug stores and work shifts.
Gov. Tim Walz’s office has said he is committed to finding a solution that keeps the services active in the state, but the bill’s progressive champions don’t want to capitulate to billion-dollar Silicon Valley tech companies.
Complicating matters further, the city of Minneapolis is on track to enact similar rates on July 1, and state Democrats — especially those representing Minneapolis — are loath to preempt the city’s own minimum wage and other labor rules.
Waiting — and organizing — in the airport lot
The large surface lot between Terminal 1 and Terminal 2 at the Minneapolis-St. Paul International Airport is the locus of political organizing for Uber and Lyft drivers. It’s one of the only places drivers regularly meet other drivers when they take a break in between fares to use one of the porta potties, eat a snack or roll out a prayer mat in the strip of grass along the chain link fence separating the lot from the runway.
Inevitably, during long waiting periods for another fare, drivers compare notes on how much the two companies are siphoning from passengers’ payments even though they, the drivers, are doing all the work.
Drivers don’t have much recourse to increase their pay or working conditions with Uber and Lyft besides simply working harder and investing more in their vehicles.
No single driver can negotiate higher pay from the companies’ complex and secretive algorithms. Unionizing is effectively out of the question, since the drivers are treated as independent contractors. They’d have to win recognition as employees before even getting around to holding an election among thousands of mostly part-time workers.
The only realistic leverage the drivers have over the companies: Democratic majorities in city halls and the state Legislature, who are sympathetic to their complaints and capable of forcing the companies to increase driver pay. At least up to a point.
The Minnesota Uber/Lyft Drivers Association, incorporated in June 2022, quickly awed progressive activists with its organizing muscle. During last year’s legislative session, founder Eid Ali could regularly turn out scores of drivers to the Capitol to fill the seats in every committee room where lawmakers debated minimum pay.
In just a matter of months, the group made their demands a priority for progressives and a political albatross for other Democrats and the companies. MULDA anchored their starting position in the stars — their Democratic allies in the Legislature initially proposed drivers earn a $6.50 fee plus at least $2.55 per mile and 65 cents per minute. On top of that, companies would have to pay drivers 41 cents per mile for fuel and maintenance expenses and riders would be charged 25 cents for each trip to fund a non-profit drivers resource center.
That proposal was quickly whittled down, and the Legislature passed a bill last year guaranteeing drivers in the Twin Cities metro area $5 per ride plus $1.45 per mile and 34 cents per minute over objections from the companies. But Gov. Tim Walz issued the only veto of his tenure to defeat the effort, instead creating a task force which included three driver representatives, all of whom were MULDA members including the groups president.
The governor also ordered a state study of driver earnings. That study — conducted by economists James Parrott of The New School and Michael Reich of the University of California, Berkeley — analyzed the more than 18 million Uber and Lyft trips taken in Minnesota in 2022 and found Twin Cities drivers earn $30.27 per hour on average before tips for the time they’re active on the apps.
After deducting the federal mileage reimbursement rate to account for drivers’ expenses, the researchers estimate the drivers earn $14.48 per hour on average — more than a dollar less than the Minneapolis minimum wage.
The companies didn’t turn over data on how much customers paid, so the economists weren’t able to calculate what share of the fare drivers keep on average in Minnesota. The companies do disclose their take rates to investors, and in a report to this month, Uber says it’s kept about 30% of revenue from passengers’ fares.
The report’s authors estimate drivers would have to earn at least 89 cents per mile and 49 cents per minute in order to earn the city of Minneapolis’ minimum wage of $15.57 an hour and pay for expenses like purchasing a vehicle and payroll taxes. If that were the minimum pay rate, drivers would see their earnings rise by about 10%.
The economists also calculated a higher per mile rate of $1.21 in the metro to cover not just the bare minimum costs of working on the platforms, but also the costs of benefits often afforded regular full-time employees like sick leave, paid leave, health insurance, retirement savings and unemployment insurance.
The study, the largest of its kind, was supposed to resolve conflicting information from drivers and the companies over what drivers make.
But it’s been attacked from all sides. An Uber spokesman called it “deeply flawed” while Lyft accused the report’s authors of being biased and pointed to their ties to organized labor.
Some drivers agree with the companies that the cost estimates are too high. Indeed, the researchers’ estimates of driver expenses are higher than the average costs reported in their survey of more than 1,800 drivers registered at the airport.
Other drivers say the expense estimates are too low, and members of the Minneapolis City Council have been reluctant to accept the results, which are lower than the rates they passed before the report was released.
Mohamud Abdi says the estimated average earnings in the report can’t be trusted because the data came from Uber and Lyft, and he suggested any drivers saying they make that much might be paid actors.
The airport lot for Uber and Lyft drivers is often so full that drivers have to wait for more than 100 drivers to be dispatched before their turn to pick up a passenger comes up. Drivers who reject too many fares — like $49 to go to Rochester — can lose their place in line.
“You wait about an hour or two hours,” said another Mohamed Abdi, who is a member of MULDA.
A driver standing next to Abdi pulled out his phone to show he had been logged on for 9 hours and 46 minutes but earned just $147.80 — or $15.14 an hour before accounting for his expenses.
Abdi says he thinks it’s better than working in the city, where drivers are offered shorter fares for as little as $5.
“Working in the city, the rates are real low,” Abdi said, noting that 10 city trips might equal one airport fare. “You spend two or three hours here, you might work $8 an hour.”
Balazs, who is opposed to the minimum rates, agrees that airport runs typically yield higher payout with less risk.
“Airport people are better tippers, and I’m not gonna get carjacked or have somebody throw up in my vehicle on an airport run,” Balazs said.
But the wait times just don’t make economic sense, he said, so he only picks up at the airport if he gets an offer right after dropping someone off.
Driver Joe Pierce, who also contributes to The Rideshare Guy website, also avoids the airport lot, but recently tested it out of curiosity. He said he ended up having to wait 15 minutes for another fare.
“And I was like, no, screw this, I’m not going to wait there,” Pierce said. “I’m kind of baffled that drivers will wait in that lot.”
Pierce said he’s been averaging about $18 per hour after expenses since he bought a new car but was making about $25 an hour after expenses last year when the companies were offering bonuses.
Rasschaert says the lot reminds her of her days as a taxi driver when she would have to wait at the airport for the dispatcher to send her on the next call. It was an inefficient system, and more than once the dispatcher forgot about Rasschaert.
“I sat there for an hour and a half once … of course, I took a really nice nap that I needed,” Rasschaert said.
One driver who picked up a Reformer reporter said he thought of it like a hunting cabin — the place you go to hang with the guys and get away from your wife and kids.
What’s fair?
Pierce said he’s appreciative of the activist drivers pushing for minimum pay rates. The platforms’ current system of offering “up front fares” to drivers based on an algorithm is ripe for abuse. Drivers have just a short window to accept or reject an offer, and the platforms can offer lower fares to drivers who are more likely to accept any and all fares, while more discerning drivers may be punished with fewer offers, he said.
But he thinks the rates passed by the Minneapolis City Council and those being considered by state lawmakers go too far.
“It just is too high. I just feel like they can come to an agreement somewhere in between,” Pierce said.
Balazs is more pessimistic. He doesn’t particularly like the companies and of course he would like to earn more money, but he’s worried if the companies raise prices, much of his work will disappear.
Many of the people he takes to work or the grocery store or the barber shop are lower income, he said. Lyft, in its letters to elected officials, has frequently said more than half of rides in Minnesota start or end in low-income neighborhoods. Lyft has also said riders in Minneapolis are much more likely to be low-income than in Seattle, which enacted minimum pay rates for drivers in 2021.
Lyft says the median rider income in Minneapolis is $56,500 compared to $103,000 in Seattle, according to the company’s rider survey. That means riders are much more sensitive to price increases in Minneapolis than in Seattle. Drivers in Seattle are guaranteed $1.55 per mile and 66 cents per minute, while in the rest of Washington state they are entitled to $1.31 per mile and 38 cents per minute.
Uber says drivers in Seattle are learning less per hour on average since minimum rates took effect even though their per trip earnings are up.
When fares and wages increase, fewer people use the platforms while more workers sign up.
In the Minnesota drivers’ earnings report, economists Parrott and Reich said this could happen and reduce drivers’ overall earnings, but noted their skepticism, writing “the companies are unlikely to raise prices to levels that would significantly reduce consumer demand and commissions.”
Both companies said the state legislation passed last year would more than double the price of the typical fare.
“How much do you think this is going to hurt people like this if all of a sudden it’s 50 to 100% more?” said Balazs, after dropping off a mother and son at a Petco. “What they’re trying to pass will make things worse.”
Other drivers say the companies don’t need to raise prices at all — they can just take less profit.
“They make millions and millions of dollars here,” Abdullahi said. “They just need to share the money … They are already charging the people too much.”
Critics of Uber and Lyft say the companies point to minimum pay rates as the cause of rising prices to distract consumers from the mounting pressure from investors for the companies to deliver profits after years of pursuing growth instead.
Researchers for Powerswitch Action, a nonprofit progressive advocacy organization, analyzed data of over 1 billion trips and found Uber and Lyft prices increased less in New York City, which enacted minimum pay rates in 2019, than in Chicago, which doesn’t regulate driver pay. Over a period of four years, Uber and Lyft fares rose 36% on average in New York City compared to 54% in Chicago, according to the researchers’ estimates.
Both companies bring in billions in revenue each year, but Uber only just had its first profitable year in 2023 — reporting $1.4 billion in profit — since becoming a publicly traded company in 2019. Lyft has yet to report a profit.
Since Uber and Lyft threatened to pull up stakes, a slew of start-ups have announced plans to enter the market, promising to pay whatever rates state and city leaders require. Already two are licensed in the Twin Cities and plan to operate soon.
Rasschaert is skeptical of the new companies but will drive for them “if forced to.” She certainly doesn’t want to go back to driving a taxi. She had to pay $500 a week to rent the car. After she bought her own taxi — a Ford Transit — her car payment went down to $250 a week, although she had to pay $559 a year to Minneapolis to be licensed.
She was an independent contractor then, just as she is treated now as an Uber driver. There were no additional worker protections, and the fees to operate were higher.
Many of the drivers at the airport lot are bullish on the alternatives and customers’ willingness to pivot to new platforms just like they did when Uber stormed into town and decimated the taxi industry.
“Let them leave,” said driver Hamze Abdi. “The people and the cars belong to Minnesota. Who is Uber? It is only [a] technology app.”