Minnesota Uber, Lyft drivers say it's getting harder and harder to make a living

On a recent Friday afternoon, Twin Cities Uber driver Mohamed Egal ferried a pilot from Nashville, a Crave chef, a Domino's worker and a patient on oxygen.

After six trips in two hours, Egal's driver-app showed Uber would pay him $69.33 for the rides after fees. He'd earned just $622 since Monday. He would have to work the weekend, too, to earn enough for the week.

It had been a costly month for the Minneapolis resident who has driven for Uber since 2015. That week he paid $200 for gas, $80 to fix shaking wheels, $20 for a car wash and $1,350 for six months of personal car insurance coverage.

That's on top of the $9,000 on transmission and engine maintenance paid four weeks ago for his 2015 Dodge Caravan. His credit card bill is $20,000 — all related to car maintenance.

"It's not fair. What Uber pays us just covers our expenses but no profit at all," said Egal, who used to be a taxi cab driver for 15 years before Uber and Lyft disrupted the marketplace and his business.

Uber and Lyft say the roughly 12,000 independent contractors who drive for them in the Twin Cities are treated fairly.

For some of the drivers, it's a side gig. Egal and many others, though, drive full-time and struggle to make the economics of app-based driving work.

Egal said he earned $23,000 last year, after expenses, much less than in years past.

As the algorithms that determine how much customers pay — and drivers earn — change, many drivers are getting louder with demands for better pay and more transparency about how the company determines the amount they receive.

That collision of low pay and high expenses has angered hundreds of Minnesota drivers, sending them to elected officials in search of remedies.

Protests, strikes and intense lobbying at city council meetings and state capitols have intensified in Minnesota and elsewhere, creating a national movement that recently brought change to the ride share industry in California, Washington and New York and resulted in a Lyft policy change.

The Minnesota Legislature passed a bill last spring — vetoed by Gov. Tim Walz — that would have set minimum pay. The Minneapolis City Council is considering a measure that would do the same. Uber and Lyft have threatened to stop serving the city if a law is passed.

Uber and Lyft say pay is fair

The pressure campaign by drivers resulted in a change of policy for Lyft. Last month, Lyft said it would guarantee 70% of a week's fares, minus external fees like car insurance premiums and tolls, to drivers.

Both Uber and Lyft say they not only provide drivers flexibility, they pay fairly. They also say they are improving transparency around how much drivers will earn.

"We're also launching a new earnings summary in the Lyft app, redesigned with a focus on transparency, so drivers can see a breakdown of where every cent of the rider fare goes," said Lyft spokesman CJ Macklin.

In Minnesota, the companies said the pay averages $26 to $35 an hour from when a driver accepts the ride to when the passenger is dropped off. Drivers said because they are not paid for the time it takes to return to the Twin Cities after dropping off a passenger or for assignment waiting times, especially at places like the airport, the pay ends up being less.

The companies also admit the fees deducted from drivers' pay are increasing but blame the rising cost of insurance, which they pass on to both drivers and passengers. They also are trying to help drivers in other ways, for example helping them to rent cars to keep driving when their vehicles break down.

At the end of the day, drivers said they often discover they now earn just 25% to 60% of the total fare. They said when they started, they were earning 70% to 80% of the fare. They also say there was a recent rash of sudden "deactivations" that kicked drivers off ride share apps with little explanation and no way to appeal.

So far, both companies have opposed per-mile and per-minute pay-minimums proposed, not only in Minnesota but around the country.

Uber spokesman Josh Gold said the company has told the state it would support a minimum fee of $26 an hour for the time spent getting and carrying passengers.

Minneapolis could weigh in

The Minneapolis City Council, for a second year in a row, is considering setting minimum pay. The current proposal would require companies such as Uber and Lyft to pay drivers a minimum of $1.40 a mile and 51 cents a minute while transporting passengers on any trip within city limits, among other guarantees.

Mayor Jacob Frey vetoed a similar measure last year.

The state Legislature in the spring passed a bill that would guarantee at least $5 per ride, $1.45 a mile and 34 cents a minute in the metro area. Pay would be $1.25 a mile and 34 cents a minute in greater Minnesota.

Gov. Tim Walz, after vetoing the bill, set up a task force to come to a solution amenable to all parties.

The task force report, filed Dec. 30, called for a new minimum of $5 per ride, and said there should be minimum per-mile and per-minute compensation but did not set an amount. It also laid out transparency recommendations.

But it did not resolve the differences between drivers, the companies and state agencies.

Uber spokesman Gold said the company supports the recommendations.

Now some of the task force members say the effort may end up with no change at all.

"To me this is very disappointing," said John Budd, a member and professor at the University of Minnesota's Carlson School of Management.

Making the economics work

One thing that has helped drivers stay in business, at least in the short term, is Uber and Lyft help in renting cars. Drivers say it helps in a pinch so they can keep working.

But in Minnesota, drivers pay around $331 to $338 a week to rent a basic sedan. That's more than a car payment and makes the gig more of a gamble, they said.

Sam Jones started driving for Lyft 18 months ago. After putting 84,000 miles on his car, the transmission died suddenly — shortly after the warranty expired.

"Driving murdered my vehicle, and it was basically a new car," said Jones while waiting on a Monday about a month ago to rent a Nissan sedan at the Hertz rental car facility for Uber and Lyft drivers in St. Paul. He hopes renting works out, but he's far from sure.

Jones had an airport customer recently pay Lyft $38 for his ride. Jones made only $9 from the fare.

"When I first started with them the fare wasn't that fair, but at least it was decent. Now? It's not even decent," he said. Still, until he can find another job, he'll drive rented wheels and see how the math works out.

Jones was at the Hertz with 17 other drivers in similar predicaments, including Mauricio Castaneda.

Castaneda had driven his own black Expedition 10 hours a day for Uber and Lyft until his transmission also died. The Robbinsdale father of three replaced it with a 2019 SUV.

But Castaneda said he had been making less and less for the same hours driving and fell behind on the loan payments. The SUV was repossessed in January.

He said he took a passenger from the Minneapolis-St. Paul International Airport to Hinckley and made $38. But Lyft charged the passenger $100 or more. He said he felt robbed.

Now, he will try to make the math work with a rented Chevrolet Malibu.

"I hope it works out. But what choice do I have? I have to feed my family. I have rent," he said. "I'm going to work at least 18 hours a day. It's hard to make the money. I am not going to sleep too much."