Ride-sharing companies Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER) have until the middle of the summer to keep operating in Minneapolis after the city council passed a measure on Thursday that would delay a hike in the minimum wage for ride-share drivers by two months.
The news drove shares of LYFT up by more than 6% while Uber (UBER) was up more than 2%.
In August, the Minneapolis city council passed an ordinance that included a minimum payment of $1.40 per mile and $0.51 per minute to be paid to drivers. Lyft (LYFT) threatened to pull out of the city should the proposal become law.
“Drivers would ultimately earn less because prices could double and only the most wealthy could still afford a ride,” Lyft (LYFT) said in a statement to Seeking Alpha.
While Uber (UBER) did not immediately say it would cease operations in Minneapolis, the ordinance would force the company to “greatly reduce service, and possibly shut down operations entirely.”
The measure was subsequently vetoed by Minneapolis mayor Jacob Frey in March, only to be passed a week later by a vote of 9-4 at a special City Council meeting.
“Today, Council Members came together to say this veto needs to be overturned so that all workers are paid the minimum wage in the City of Minneapolis, regardless of their profession,” said City Council president and vice president Elliott Payne and Aisha Chughtai in a joint statement cited by KSTP News.
Frey warned that the vote would massively impact the region. “Getting a raise doesn’t do a whole lot of good if you lose your job.”
Less than a month later, however, and three weeks before it was to take effect, the City Council voted unanimously to delay the start date to July 1 in an effort to allow new ride-share businesses time to get licensed and operational in the city. Only four entities have filed for licenses to operate a ride-share business in the city, all of which would be subject to the same provisions as Uber (UBER) and Lyft (LYFT).