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What does Michigan's minimum wage increase really mean for workers?

January 19, 2023
<p>Coins photographed on April 7, 2020.</p>

Coins photographed on April 7, 2020.

Photo by Matt Zubik | The State News

On Jan. 1, the minimum wage in Michigan was increased from $9.87 per hour to $10.10 per hour, as set by Michigan’s Improved Workforce Opportunity Wage Act of 2018. The tipped minimum wage also rose from $3.75 to $3.84 hourly. 

In 2018, the Michigan legislature passed legislation that would have increased the minimum wage to $12 per hour by 2022. However, in November 2018, state Senate members voted to amend this legislation. Under these amendments, the time allowed for the wage hike would be lengthened, meaning it would not be until 2030 when the $12 per hour would be mandated.

However, on July 19, 2022, the Michigan Court of Claims ruled these amendments to be unconstitutional. This upcoming February, the Michigan Court of Appeals will rule on a proposed $13.03 per hour for wage workers and $11.73 for tipped workers. 

Some executives in the food service industry are opposed to such a rise in the tipped minimum wage. Restaurant Partners Management President Jeff Lobdell said with many restaurants operating on low margins, eliminating the tip credit would cost him over six dollars per hour for each employee.

“It would be crushing and devastating to many businesses like mine if they got rid of the tip credit, and the businesses had to pay that ($11.73) wage and allow them to make tips on top of that,” Lobdell said. 

Michigan State University Economics Professor Steven Haider said the benefits and drawbacks of the current minimum wage increase are clear. He said it will reduce employment due to the growing cost per employee. As a result of this wage boost, companies can afford to hire fewer workers. 

Haider said people who keep their jobs are the beneficiaries of the 23-cent more-an-hour gain, while those that lose their job or will not be hired, are on the losing end. 

“The real question, then, is how many people will benefit with an increase in minimum wage versus how many people lose their job?” Haider said. 

Haider said he estimates the approximate two-percent minimum wage increase would have a minimal effect on employment numbers, especially teenagers.

“The number of teenagers that would lose their jobs would be about a tenth of a percent,” Haider said.

Education freshman Lexi DeJonge, who works as a server at Texas Roadhouse, said the increased wage gave her more money while she worked between fall and spring semester. She said most of the time, she makes between 15 and 30 dollars an hour from tips.

 DeJonge said the near-eight-dollar increase in the tipped minimum wage, as proposed for February 19, would offset the inconsistency of tipping markets.

“It’s just difficult to rely on tips, especially only making like three dollars an hour,” DeJonge said. “You have to depend on these people giving you extra money on top of what they’re already purchasing.”

Lobdell is hopeful that most restaurants are content with the current system and will keep the status quo. He said very few people still make minimum wage and that the market is dictating wages based on the supply and demand for labor.

“I don’t think I have anybody making less than $15 an hour anywhere,” Lobdell said of his stores.

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