The Michigan minimum wage for 2023 has slightly increased. Unfortunately, it’s not what the workers expect. It officially became $10.10 per hour on January 1, 2023, in what the state government regards as a phased increase backed by law.
The stakes are high for workers and business owners in the state. While workers would want a higher wage, employers are concerned that the increase could impact jobs. How? They claim many workers could lose their jobs.
In 2018, Michigan voters approved a ballot measure to decide workers’ minimum wage. It was a historic move, adopted by the lawmakers.
If things had gone the voters’ way, minimum wage would have increased to $13.03 per hour for non-tipped workers. For tipped workers, it would have increased to $11.73 per hour. Unfortunately, things haven’t gone as planned.
Here is what we know about Michigan Minimum wage 2023, the legal fireworks and more!
The Legal Battle At Michigan Court of Claims
There has been a legal battle regarding the issue of Michigan’s minimum wage since 2018. What happened? A progressive ballot measure was supposed to go before the voters, but the lawmakers turned their backs on the voters.
According to the Michigan Department of Labor and Economic Opportunities, the minimum wage should have increased to around $13.03 for non-tipped workers and $11.73 for those relying heavily on tips (e.g., waiters and waitresses). These were Michigan workers’ wishes.
The ballot measure would have brought significant change to Michigan workers’ wages. It would have phased out the lower wage for tipped workers by 2024.
Unfortunately, things didn’t go according to plan for the workers. The Republican lawmakers worked against them. The Republican lawmakers were the majority in both the Senate and the state House. Thus, it was easier for them to water down the wage provisions.
The lawmakers’ action angered hundreds of Michiganders, leading to protests at the Capitol rotunda. People were angrier because the lawmakers had adopted the measure before the 2018 election, only for them to return and work against the wage provisions.
Rick Snyder, the then-governor, was a Republican. And since the lawmakers were against the people’s requested wage increase, the governor had to sign the legislation into law.
Snyder’s action made the people realize their hope of a higher minimum wage is gradually fading. The only option left was to take legal action against the government.
The legal battle has been ongoing for some years now. The presiding judge at the Michigan Court of Claims, Douglas Shapiro, wasted no time in acknowledging the wrong the lawmakers did. He stated that the lawmakers’ action violated the state’s Constitution. He made them understand they had no right to thwart the people’s will.
The judge said, and I quote, “Were the court to adopt the state’s argument, it would imply that anytime a majority of the lawmakers opposed the content of an initiative, it could prevent it from becoming a law and deny the people the opportunity to vote on it.
According to Judge Shapiro, the lawmakers violated Articles 2 and 9 of the state’s Constitution, as such power is reserved for the people of Michigan.
The Legal Battle At Michigan Court of Appeals
Not satisfied with Shapiro’s ruling, the lawmakers approached the Court of Appeals. Then on January 26, 2023, the Court of Appeals reserved the Court of Claims’ decision, pointing out that the maneuver the lawmakers did wasn’t unconstitutional.
Workers’ wages under the watered-down provisions increased slightly. It increased to $10.10 per hour for non-tipped workers and is set to increase yearly.
Michigan Minimum Wage 2023 And Beyond
Michigan workers may not be satisfied with the recent increase in the minimum wage. Nevertheless, the increase in 2023 shows slight progress has been made.
Michigan is one of the 30 states with a minimum wage higher than the federal rate ($7.25). The state’s minimum wage is currently $10.10, which will increase in subsequent years.
According to Michigan.gov, here is how the state’s minimum wage is expected to increase in subsequent years:
Note: Michigan’s minimum wage can only increase if the unemployment rate decreases. In other words, if the unemployment rate rises to 8.5% or higher, the minimum wage won’t increase. Furthermore, the tipped minimum wage remains at 38% of the total minimum wage.
Under the watered-down wage provisions, workers’ minimum wage won’t rise to $12 until 2030. But under the original 2018 ballot proposal, the hourly wage was expected to increase to $12 per hour on January 1, 2022, and adjusted annually based on the cost of living.
Here’s what non-tipped workers would have made weekly if the original wage increment was restored.
Based on the workers’ proposed minimum wage increase, their weekly wage would have increased to $521 per week. Yearly, it would have increased to $27,102 for a 40-hour per week of work.
On the other hand, tipped employees such as restaurant servers would have been receiving approximately $469.2 weekly and $424,398 per annum. Unfortunately, the lawmakers worked against the people’s wishes.
The minimum wage for tipped workers in Michigan is nothing to write home about. Workers receive $3.84 per hour. Last year, they received $3.75 per hour.
Here’s how the wage for tipped employees works. If a tipped worker receives less via gratuities than what they would have earned under the minimum wage for non-tip workers, the employer would have no other option but to pay the difference in wage.
Judge Shapiro’s judgment would have favored the Michigan workers more. He had already ordered the lawmakers to make the ballot initiative work again.
Michigan Minimum Wage vs. Federal Rate 2023
Federal and Michigan minimum wages have changed massively since 1965. However, the current federal rate is $7.25.
The Michigan minimum wage might not be what the workers want, but it’s higher than many states’ hourly rates. Hourly rates in 30 states are higher than the federal rate, and Michigan is one of those states.
That’s not all. When you examine the 2022 minimum wage of these 30 states, you’ll discover that 19 states boast a minimum wage of $11 or higher, while seven states pay over $13 per hour.
Here is a breakdown of the seven states with an hourly wage higher than $13 per hour.
- Washington ($15.74)
- California ($15.50)
- Massachusetts ($15.00)
- Connecticut ($15.00)
- New York ($15.00)
- Oregon ($14.20)
- New Jersey ($14.13)
In 2022, Michigan’s minimum wage was the 26th-highest in the country, according to the U.S. Department of Labor. Today, the $10.10 per hour wage is the highest in the state’s history, though not when adjusted for inflation.
The state’s minimum wage in 1979 was $2.90. And today, that amount would have been equivalent to $12.95, considering the dollar’s value.
What Researchers Have Said About Increase In Michigan Minimum Wage
Increasing the minimum wage will always bring mixed results for the economy, workers and businesses. Research from the Economic Policy Institute (EPI) has shed more light on what might happen following the wage increase.
According to the EPI, a Washington D.C.-based liberal think tank, increasing the federal minimum wage to $15 by 2025 will have a massive effect on 21% of the workforce or around 32 million workers.
This study wasn’t only about Michigan but the entire country. According to the institute, workers’ wages would increase by $3,300.
Research by the Congressional Budget Office (CBO) is another eye-opener. The CBO is a non-partisan research agency. And as the name implies, it works for Congress.
According to the CBO, an increase in minimum wage will have a massive impact on low-wage workers. It will improve their wages and impact their lives directly. The CBO claims a rise in minimum wage will pull many citizens out of poverty.
The major challenge is the impact it would have on employers. They are the ones that employ and pay workers. They wear the shoe and know where it hurts the most.
An increase in minimum wage will cause many to lose their jobs as employers try to balance their books.
Increasing the minimum wage will also force many businesses to change their strategy. Employers may even hire more workers, only to reduce the number of hours they can work.
Some researchers think that a higher wage will make employees more productive, boosting the workers’ buying power and strengthening the economy.