Great Lakes Wire

Michigan’s $10.33-an-hour minimum wage will increase to around $12.25 to $12.30 an hour, and tipped workers will see their base wage rise from $3.93 an hour to approximately $5.90 an hour by February 21, 2025, under a Supreme Court ruling issued Wednesday.

The tipped wage will be phased out over five years. By 2030, all employees are expected to earn a minimum wage of around $15 an hour, based on calculations derived from the court’s decision.

In ruling that the Legislature does not have the constitutional authority to adopt a ballot initiative and then immediately amend it, the Supreme Court established an implementation schedule that aligns with what framers of the 2018 initiative had envisioned, adjusted for inflation.

The framers had anticipated a $10 minimum wage going into effect 205 days from its adoption. Similarly, 205 days from the decision in Mothering Justice v. Attorney General is February 21, 2025. A $10 minimum wage today equates to $12.29, according to an online inflation calculator used by MIRS News Service. The inflation rate used to set the wage will be calculated by the Department of Treasury, which is still reviewing the decision.

The tipped wage in the first year of the One Fair Wage initiative was set at 48% of the minimum wage. This percentage will gradually increase until it reaches 100 percent by 2030. This translates to about $5.90 an hour in 2025 for tipped workers, approximately $7.85 an hour in 2026, and eventually about $15 in 2030.

These figures are rough estimates; official inflationary adjustments to the minimum wage will be released later by the Department of Labor and Economic Opportunity (LEO) and the state Treasurer.

“We are committed to collaborating with the labor and business communities on educational outreach to ensure a thorough understanding and smooth implementation of the court’s ruling,” said LEO spokesperson Jason Moon.

Additionally, a new paid sick leave policy – allowing all employees one hour of paid sick leave for every 30 hours worked – will take effect on February 21, 2025. Under this policy, employees can use up to 72 hours or about nine eight-hour days of paid sick leave annually.

“This is a great day for more than 494,000 workers in Michigan who are getting a raise,” said One Fair Wage President Saru Jayaraman. “We have finally prevailed over corporate interests who tried everything they could to prevent all workers, including restaurant workers, from being paid a full fair wage with tips on top.”

Jayaraman noted that Michigan would become the eighth state and first east of the Mississippi River to end separate tipped wages for workers and also be among states doing so after more than four decades.

“It’s clear tipped workers don’t just need a tax exemption – they need living wages with tips on top,” he said.

One Fair Wage planned a celebratory event Wednesday afternoon in Detroit.

However, Wendy Block, senior vice president of advocacy for the Michigan Chamber of Commerce stated that moving away from tipped wages would be “devastating” for restaurants and other establishments relying on such workers.

“We should expect nothing less than closures of restaurants across Michigan and reductions in workforce,” she said.

Block also criticized the new “one size fits all” earned sick leave policy as potentially burdensome for businesses due to administrative costs.

“It’s hard to imagine how businesses big and small will make these changes without cutting back drastically elsewhere,” Block added.

A coalition called Save MI Tips reported that Washington D.C lost approximately 2,900 jobs after eliminating tip credits there; they estimate around 45,000 Michigan servers and other employees may lose their jobs as a result of this decision.

The Michigan Retailers Association commented that the given timeline allows legislators time to address "necessary updates" regarding some components of this law.

Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

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