LANSING, Mich. (Michigan News Source) – The Michigan Supreme Court’s 4-3 decision to strike down a 2018 “adopt and amend” measure means that minimum wage increases will be forced on Michigan businesses by the end of February.
The announcement came this week that Michigan’s current minimum wage will rise 20% by the end of February to $12.48 per hour. This will come after a Jan. 1 minimum wage increase from $10.33 to $10.56. The state treasurer will increase the figure each year according to inflation, which means minimum wage in Michigan will reach $14.97 by Feb. 2028.
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The Michigan Restaurant and Lodging Association (MRLA), along with business owners, have repeatedly called on the state’s Democratic-led legislature to combat what they say will be catastrophic ripple effects for restaurants and bars. The plea has fallen on deaf ears. “The will of those who actually work in this industry should matter,” said MRLA President & CEO Justin Winslow on social media.
In addition, the ruling eliminates the tip credit and forces paid sick leave on an already embattled industry. Many restaurant and bar workers fear patrons won’t leave a tip if they know they are being paid a higher base wage.
A survey of MRLA operators found the tip credit would be devastating to small businesses. Emily Daunt, MRLA Vice President of Communications and Brand Strategy told Michigan News Source that when asked about the impact of losing the tip credit, two-thirds of restaurant operators would be forced to lay off employees. “That’s an estimated 40,000-60,000 restaurant jobs lost” Daunt said.
In addition, the survey indicated most of the job loss would be concentrated amongst tipped employees. Most, if not all of the operators would raise menu prices at least 25%. And that’s just for the ones that survive. One-in-five full-service restaurants would most likely close permanently, Daunt said.
This situation stems from a 2018 ballot initiative regarding minimum wage that did not receive voter approval. Rather, the Republican-controlled legislature made changes to the proposal before a new governor and legislature took office. Then this summer, the Michigan Supreme Court ruled the “adopt and amend” action taken by Republicans was illegal.
In February, the minimum wage for workers who regularly get tips will be 48% of the standard minimum wage, the labor department said. By 2030, the two categories will reach even levels.
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