Michigan's minimum wage hike not likely to see lame-duck limelight
Editor's note: This story has been corrected to reflect that in 2023 the state's minimum wage would rise to $12 per hour and the tipped wage would be placed at 90% of that.
Both Gov. Gretchen Whitmer and business groups have expressed concern about a hike to the state's minimum wage slated for February, but the issue — and the underlying "adopt and amend" legislative maneuver that thrust it into action — appears unlikely to be on tap for the outgoing Legislature's lame-duck session.
Michigan is slated for two changes to its wage laws on Feb. 19 — the state’s minimum wage will rise to $12 per hour, and the state will begin to eliminate its tipped minimum wage, the below-standard wage paid to hourly workers who are expected to make up the difference in tips.
Prompting this change is a July ruling from Court of Claims Judge Douglas Shapiro. Shapiro ruled the Michigan Legislature acted unconstitutionally in 2018 when it adopted legislation created through a petition initiative originally intended to enact the wage changes, but in the same session amended the language to put in lower wage thresholds that increased the minimum wage to $12.05 by 2030 instead of 2022 and kept the tipped minimum wage at 38% of the standard one. In 2023, the tipped minimum wage is slated to go to 90% of the regular minimum wage, and it would match the standard minimum wage in 2024.
Shapiro stayed the ruling until Feb. 19 to give employers time to implement the changes.
The looming change is a sudden jump from the state's current hourly minimum wage of $9.87 per hour and $3.75 per hour for tipped workers.
Whitmer said she’s heard serious concerns from employers about the wage change and is supportive of lawmakers passing legislation — possibly as soon as the lame-duck session — to slow the pending increases down.
“I’m hearing concerns from employers,” Whitmer said in a Tuesday interview with the Free Press. “The very employers that the Legislature was supposedly trying to help” with its “adopt and amend” tactic with a ballot proposal, “they’ve now put in a terrible position,” she said. “A lot of (employers) are worried,” now that the courts have ruled the tactic unconstitutional, and they are faced with a much more sudden jump in the minimum wage than they would have had to confront if the ballot proposal had been left as it was. “I understand that,” Whitmer said.
More:Ruling on Michigan tipped wages could be 'massive, fundamental' change to restaurant industry
But with control of the Michigan Legislature flipping to Democrats in January for the first time in decades, it’s unclear if a solution to the adopt-and-amend ruling will be reached during the so-called lame-duck session before power changes hands at the start of next year.
“The lame duck agenda is still being discussed, but with the results of the election last week it seems unlikely Democrats will be inclined to consider any major policy matters until the new year,” Matt Sweeney, a spokesperson for current Sen. Majority Leader Mike Shirkey, said over email. Sen. Aric Nesbitt, a Lawton Republican who is poised to become minority leader next year, said he wasn’t familiar with any discussion on changes to minimum wage currently taking place.
Attempts to reach House GOP leaders, as well as incoming Democratic leadership, were unsuccessful.
Shapiro’s July ruling was appealed by the state — oral arguments are set to take place at the Michigan Court of Appeals Dec. 13.
Brian Calley, president and CEO of the Small Business Association of Michigan, said the adopt-and-amend issue likely will have to be heard by the Michigan Supreme Court for a final determination. The court previously declined to take up the issue in December 2019, MLive reported.
SBAM is one of several organizations to file briefs in support of the state’s appeal. Calley, who was also lieutenant governor in Michigan from 2011 to 2019, said it’s unclear if the incoming Democratic leadership would prioritize adopt-and-amend before the Feb. 19 deadline, given the state of flux Lansing will be in.
“I think the dynamics of lame duck are dramatically different now that the majority is changed in the House and the Senate," Calley said. “With majorities as small as they are on both sides of the Capitol, I think that it will be difficult to do anything that comes with controversy.”
The Michigan Restaurant and Lodging Association also filed a friend-of-the-court brief on behalf of the state in its appeal of Shapiro’s ruling. MRLA President and CEO Justin Winslow said the organization is “operating with the assumption at this point there will be a very limited lame duck session.”
Democratic leaders, who have not held majorities in the Legislature for decades, will likely spend the first weeks of the new session assigning committee leadership and tackling major policy goals, Calley added. Goals already outlined by Democratic lawmakers include addressing Michigan’s right-to-work laws, abortion access and gun laws, among other priorities.
Whitmer said it would “perhaps” be easier to pass such legislation with the current Republican-controlled Legislature than with the Democratic House and Senate that take office in January.
“That is certainly something that might make sense to get done in lame duck,” she said.
There are conversations underway at the staff level with the current legislative leaders, but it’s not clear what the terms of any legislation to slow the minimum wage increase would be, or how much negotiation would be required, she said. But Whitmer did not appear optimistic the Legislature would take up the issue before the end of the year.
“Some representations have been made that perhaps they’re not interested in doing a whole lot,” during the lame-duck session, she said. “We’ll see.”
“What does the ultimate ideal solution look like? I have not prejudged it. I am open to having that conversation," Whitmer said. "I have always supported increasing the minimum wage, and workers’ rights. I think that’s very important. I also am a reasonable person who’s willing to entertain that conversation. If people of goodwill want to try to figure out a solution that everyone can live with, I’m open to it.”
Advocates for raising Michigan’s minimum wage say it would lead to better economic outcomes for workers in Michigan. Those earning wages through tips, mostly in the hospitality industry, wouldn’t have to rely on the generosity of their patrons to make a living, proponents say.
Seven states currently set minimum wage levels for tipped workers at the same level as non-tipped workers: California, Oregon, Washington, Nevada, Montana, Alaska and Minnesota, according to the Economic Opportunity Funders Network, a national organization that advocates for economic equity.
Business advocacy groups say the changes to the state’s wage scale, however, would levy additional costs on employers. Winslow said the MRLA expects somewhere between 40,000 and 50,000 restaurant jobs to be lost if the tipped minimum wage is replaced. As of September, there were 395,000 people working in the leisure and hospitality industry in Michigan, per the U.S. Bureau of Labor Statistics.
In addition to the Improved Workforce Opportunity Wage Act, the law the Legislature used to amend the 2018 minimum wage petition, Shapiro’s ruling also reverted the Earned Sick Time Act. The initial petition language that led to the Earned Sick Time Act would have required employers with fewer than 10 employees to allow employees to accrue up to 40 hours of paid sick time annually and employers with 10 or more employees to accrue up to 72 hours of paid sick time per year.
The Legislature amended the petition to remove requirements for employers with fewer than 50 employees.
Asked if the paid leave provisions also need to be slowed, Whitmer said the two issues need to be looked at “in concert,” but employers seem especially concerned about the wage provisions, particularly a dramatic jump in the wages for tipped workers.
“It bears refreshing everyone’s recollection that this was the Legislature that took action to thwart the will of the people and plunged the whole state into this kind of unknown territory,” she said.
“People should be mad at that Legislature. They were messing around and now there is a mess for us to try to figure our way out of, or through.”
Contact Arpan Lobo: alobo@freepress.com. Follow him on Twitter @arpanlobo.
Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan.
This article originally appeared on Detroit Free Press: Debate on Michigan's minimum wage increase not expected in lame duck
