2024 looks like an excellent year for employees in Michigan with a slight increase in the minimum wage, but the question remains, ‘What is the minimum wage in Michigan? This is the amount of remuneration employees get per hour.
The minimum wage in Michigan is set by Michigan’s Improved Workforce Opportunity Wage Act of 2018.
Workers with the lowest wages will have something to celebrate with wage increases. But for most people, Michigan’s minimum wage remains below the livable wage.
So, What Is The Minimum Wage in Michigan?
As of January 2024, the hourly minimum wage in Michigan rose from $10.10 to $10.33. The wage rate for minors aged 16 years and 17 years is 85%, which rises to an hourly rate of $8.78. Tipped employee wages increase to $3.93 per hour while training wage is $4.25 per hour.
Is the increase enough? Keep reading as we break down the minimum wage in Michigan and if it meets the living standards of Michigandans.
Michigan Minimum Wage Set to Increase January 1, 2024
Starting January 1, 2024, the minimum wage in Michigan is set to increase from $10.10 per hour to $10.33 per hour.
The new rate was set by Michigan’s Workforce Opportunity Wage Act of 2018. The legislation sets the yearly timetables for raises.
Below are the new schedules for increases:
- The minimum wage will rise to $10.33 per hour.
- 85% increase for individuals aged 16 and 17 to $8.78 per hour
- Increase of $3.93 per hour for tipped employees
- The hourly rate of $4.25 training wage for newly hired employees aged 16 to 19 for the first 3 months of their employment doesn’t change.
The slight increase is still below the considered livable wage in Michigan. As per the living wage calculator, adults without children must make at least $16.27 per hour. This number increases to $36.81 per hour for adults with children.
So, should the minimum wage in Michigan increase further? Let’s look at some key data points.
The Minimum Wage Debate
This is a hot topic across the United States with a push to increase the deferral minimum wage. House Representatives and Senate Democrats have already introduced legislation to raise the minimum wage.
According to the Raise the Wage Act, they seek to raise the federal minimum wage from $7.25 to $15 by 2025.
The Federal wage has not increased since 2019. More than half the states, including Michigan, pay minimum wages above the federal wages.
In September 2018, the Michigan legislature raised a bill to increase the minimum wage to $12 by 2022. However, the bill did not pass. In the last days of Rick Snyder’s day in office, lawmakers gutted the bill.
To understand the minimum wage debate clearly, let’s look at some key facts and figures.
Key Facts and Figures in the Minimum Wage Debate
What are the key facts and figures in the minimum wage? Let’s look at the poverty line to better understand the need for improved wages.
The US poverty line for a single person under the age of 65 stands at $12,760 per year. This increases to $26,200 for a family with two kids.
You can then compare the poverty line to the gross income of a federal employee working 40 hours per week. Such employees earn amounts to $15,080 per year gross income. As you can see, the wage is only suitable for single persons without kids.
But who is making minimum wage? Is it just teens? Let’s have a breakdown of the employees on minimum wage:
- More than 51% of the minimum-wage workers are adults aged 25 to 54. Only one in ten is a teenager.
- Six in ten persons, which is 59%, are women
- More than half (54%) of the employees work full-time
- Over 43% of the workforce on minimum wage has some college experience
- More than 28% of the workforce have children.
- Nearly one-quarter (26%) of Latinos and one-third (31%) of African Americans get a raise in the federal.
- Almost 23% of the beneficiaries have children.
The living wage varies from one state to another. For example, in Michigan, the livable wages are higher than the federal minimum wages.
What is the Impact of Increased Minimum Wage on Employers?
Any increase in minimum wage does have a direct impact on business. However, it’s pretty tricky to predict the extent of the impact.
Economic experts predict that some businesses might end up closing. This can also lead to increased consumer prices.
For inexperienced job seekers, getting a job will become even harder. This is because most employers don’t want to spend much on training.
Some think this could lead to more automation at work. This will automatically lead to job losses.
Ideally, employers tend to hire fewer low-wage workers when the minimum wage increases. It’s even better for employers since fewer workers will leave their jobs. This means they will spend less on training new workers.
But for most businesses in Michigan, the impact will be minimal as most are already paying higher because of the demand.
Michigan Overtime Minimum Wage
Employees in Michigan are entitled to a higher rate when working overtime. The rate is set at 1.5 times their regular hourly rate. This is a bonus for any hours they work beyond the 40 hours a week.
This will translate to an overtime hourly rate of $15.5. For restaurant owners, there are exceptions. Some executive, administrative, and professional employees might not be eligible for the overtime rates.
Historical Minimum Wage Rates in Michigan
Michigan has experienced changes in its minimum wages over the years. The changes reflect the economic changes and policy shifts over the years. Below is the evolution of Michigan’s minimum wages over the years.
- 2014: $8.15
- 2015: $8.15
- 2016: $8.50
- 2017: $8.90
- 2018: $9.25
- 2019: $9.45
- 2020: $9.65
- 2021: $9.65
- 2022: $9.87
- 2023: $10.10
- 2024: $10.33
How Small Business Owners Should Prepare for Increases in Minimum Wage in Michigan
Small businesses should prepare accordingly for the changes in minimum wages to avoid closure. This is because they will be impacted by extra expenses in wages. Below are some steps to prepare.
- Understand what you need: Make sure you know everything about hiring. You need to be updated on the latest policies to transition smoothly.
- Upgrade on old technology: You need to learn the latest technology to solve complicated and time-consuming tasks. There are hundreds of tools and software online that can help lessen some of your business workload.
- Find the right employees and keep them: Ensure you get it right during the hiring process. You need to follow the best hiring practices to find the right employee. Make sure you invest in the employees and always prioritize employee retention.
- Re-evaluate your budget: Do you need to adjust your budget? Check out your monthly cash flow and adjust your budget accordingly. Consider the minimum wage increase changes for any future hiring.
The simple steps above will ensure your business is prepared to survive the wage increases. It will also ensure you stay in compliance with the wage laws.
Views on Wage Increase From Employers in Michigan
For most employers, an increase in wages means more expenditure on wages. However, some employers have embraced the changes, citing the increased cost of living.
The director of Restaurant Opportunities Centers of Michigan, Chris White, calls it good news for the employees in the lowest-paying jobs.
With the cost of living on an upward trajectory, it only makes sense to increase the wage rather than leave it stagnant.
Speaking to the Michigan Public Radio Network, Chris says the increases will help attract and keep people within Michigan. This is good news, with statistics showing Michigan’s population is not growing like other states.
However, some business groups were opposed to the wage increases. Most claim the increases will not help the hospitality and retail sector.
The Michigan Restaurant and Lodging Association president, Justin Winslow, says the worker demand is very high. He claims most businesses are already paying more than the minimum wage.
He claims while the law set the new minimum wage at $10.33, the de facto minimum wage is still higher because the economy is demanding.
The effects of increased minimum wage in Michigan will not impact businesses greatly as most are already paying higher.
The minimum wage in Michigan increased from $10.10 to $10.33 starting January 1, 2024. The new wage increase came from Michigan’s Improved Workforce Opportunity Wage Act of 2018.
A slight increase is necessary with the increase in the cost of living. But for most businesses in Michigan, the demand for jobs is higher. Most businesses are already paying higher due to the economic demand for jobs.
Michigan’s minimum wage is higher than the federal minimum, with businesses paying even higher due to demand. Michigan is one of the 22 states boosting their wages in 2024.