5 things to know about Michigan's minimum wage increase
Michiganders who are paid minimum wage will be getting a raise Friday. After many hurdles and changes, the state’s new minimum wage law is being put into effect.
The law originally started as a ballot initiative, although it looks very different from when it was adopted by the state Legislature in September 2018.
Here’s what you need to know about the new law, how it has evolved in the last nine months, and what other changes could still be in store.
1. The minimum wage increases by 20 cents Friday.
The minimum wage will increase from $9.25 to $9.45 per hour Friday. That’s $2.05 higher than it was ten years ago.
Approximately 2.6 million people in Michigan are hourly workers, although many of them already earn above the minimum wage and would be unaffected by this increase.
Tipped workers are still allowed to make 38% of the minimum wage — $3.59 plus a reported tip minimum of $5.86.
The goal of the current law is to raise the minimum wage to $12 by 2030. If the law remains the same, this means the minimum wage will raise to $9.65 in 2020, and $9.87 in 2021.
The LARA guidelines specify that overtime requirements will remain the same:
“Overtime requirements remain the same under the Improved Workforce Opportunity Wage Act; non-exempt employees should be paid 1.5 times their regular rate of pay for hours worked over 40 in a 7-day work week.”
2. The initial law called for $12/hour by 2022.
The original proposal was signed by more than 370,000 Michiganders, and was certified by the Board of Canvassers in July 2018. That gave the state Legislature a choice: either adopt the proposal, or let it go onto the November ballot.
The Legislature chose to adopt the petition, which in its original form would have raised the minimum wage to $10 per hour in 2019, $10.65 in 2020, $11.35 in 2021, and $12 per hour in 2022. The minimum wage would then be adjusted for inflation annually.
The original language also included changes to the tipped wage law, meaning bartenders and waitstaff would earn the standard minimum wage by 2024 instead of the current standard of 38% of the minimum hourly wage rate.
The petition was sponsored by the organization Michigan One Fair Wage, which advocates for a livable wage for hourly workers.
3. The Legislature made some drastic changes in December.
Michigan’s Constitution states that once a voter initiative is certified, the Legislature has 40 days to adopt the measure, which is what they chose to do with the minimum wage and the sick leave petitions in 2018.
However, a controversial move by Republican leaders during the Legislature’s lame duck session in December gutted most of the original law.
Instead of a $12 minimum wage by 2022, the bill passed by the Legislature moved the goal to 2030. That’s an increase of $2.40 over ten years, not much more than the adjustments made to the minimum wage in the previous ten years. The bill also removed the provision that would have matched annual increases in minimum wage to inflation.
And the tipped wage will remain 38% of the standard minimum wage, instead of being raised to the full minimum wage as promised by the ballot initiative.
The changes by the Legislature drew an outcry from groups that supported the ballot initiative, claiming that the move went against the will of Michigan citizens. Michigan One Fair Wage called Republicans’ plans “diabolical,” and urged voters to contact their representatives.
Former Governor Snyder signed the bill at the end of the lame duck session in December.
4. There are some possible challenges.
The new minimum wage will go into effect Friday, but Attorney General Dana Nessel and the Michigan Supreme Court are weighing the legality of both the Legislature’s actions last term and the law itself.
Nessel may issue an opinion on whether Michigan’s Constitution allows a Legislature to adopt and the change a voter initiative in the same term. And the Supreme Court has been asked to submit an opinion on the same question, as well as whether the altered version of the legislation is legal.
According to Bridge Magazine, “Neither Nessel’s office nor the court has said when it will decide whether to release an opinion. But legislators from both parties, who requested the opinions, and employer groups have asked for clarity on the issue sooner rather than later.”
If Nessel submits an opinion, it could lead to a legal challenge.
State Democrats have also introduced legislation that would revert the law back to it's original form, but since Republicans control both the House and Senate, those bills are unlikely to go far.
5. Voters support a higher minimum wage.
Michigan is not alone in adopting a higher minimum wage. There have been campaigns to raise the minimum wage in many states, including Maryland, which just passed a $15 minimum wage bill Thursday.
The federal minimum wage is $7.25. Studies have found that voters want a higher minimum wage. One survey showed that Michigan voters wanted a $10.40 minimum wage in 2016. The current law won’t hit that until 2023.