© 2021 MICHIGAN RADIO
91.7 Ann Arbor/Detroit 91.3 Port Huron 104.1 Grand Rapids 91.1 Flint
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
Economy

State's minimum wage hike likely to remain stuck next year, thanks to provision in law

The state could lose up to 260-million dollars in federal funding for Medicaid this year. That's because of lower-than-expected revenues from Michigan's new one-percent tax on health insurance claims, which started in January.

Minimum wage workers in Michigan likely won’t see a pay increase in January, thanks to a provision in the state’s wage law.

In 2018, the state passed a law setting minimum wage increases each year starting January 1. But the increase can only take effect if the annual unemployment rate for the state is below 8.5%.

Michigan was well below that number in October. But the huge spike in unemployment in the spring and summer makes the annual rate higher. The Michigan Department of Labor & Economic Opportunity says the average rate from January through October is currently at 10.2%.

So now the state says, come January 1, the official minimum wage rate will likely stay stuck at $9.65 an hour.

That rate is much lower than what Michiganders signed onto in a signature drive in 2018 for a ballot proposal that would have increased the minimum wage to $12 an hour by 2022. The signatures were enough to get the minimum wage increase on the ballot, but the Michigan Legislature decided to pass its own law instead. 

As Michigan Radio reported when the law took effect: 

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.

Under the current law, the next pay bump wouldn’t take effect until 2022, if the annual unemployment rate falls back under 8.5%. Then the minimum wage rate would jump to $9.87 an hour.

Want to support reporting like this? Consider making a gift to Michigan Radio today.

Related Content