As Michigan Debates Tipped Minimum Wage, Restaurants Remain in Limbo #DetroitFood

One Fair Wage supporters march through Detroit in January. | Photo by Aaron J. Thornton/Getty Images for One Fair Wage

Michigan lawmakers have until Friday to intervene on a Michigan Supreme Court order

In September, in clarifying the gradual elimination of the tipped minimum wage by 2030, the Michigan Supreme Court set a countdown toward this week. Many small businesses, including restaurants, rely on customer tips to pay workers, with the government kicking in on slow days when customers are scarce and when tips don’t subsidize the standard minimum wage. The standard wage is $10.56 an hour in Michigan, and the tipped minimum wage sits at $4.01 an hour.

Lobbying groups, like the Michigan Restaurant & Lodging Association, want Lansing lawmakers to intervene and block the court order in favor of a bipartisan measure approved last week by the State Senate. The House and Gov. Gretchen Whitmer have until Friday, February 21 to take action or the standard minimum wage would rise to $12.48 an hour, and the tipped minimum wage would grow to $5.99 per hour, a 48 percent rise. The increases would continue until the tipped wage matches the standard wage in 2030.

The restaurant association says its members can’t afford those increases and that it could lead to closures. Last week’s bipartisan deal is seen as a compromise. While the tipped minimum wage remains intact, earnings would hypothetically increase (not all workers are happy with the change, saying they like the current tip system just fine). The tipped minimum wage would increase annually between 38 to 50 percent until 2031. Following last week’s vote, Justin Winslow, president and CEO of the Michigan Restaurant & Lodging Association said in a written statement that the Michigan Senate vote was a significant victory for the state’s hospitality industry and the tens of thousands of service workers who rely on the tip credit system for their livelihoods. Organizers from One Fair Wage, a nationwide grassroots effort that grew out of the worker-advocacy group Restaurant Opportunities Center of New York, are calling the bill a “betrayal” that violates the spirit of the court’s ruling.

In 2018, a One Fair Wage ballot initiative asked voters to decide whether to raise Michigan’s standard minimum wage from $10.10 an hour to $13.03 an hour and raise the tipped wage to $11.73 an hour starting in 2025. A second petition focused on sick leave. The state’s Republican-led legislature adopted both bills and later amended them to instead increase the minimum wage to $12.05 by 2030.

Backed by progressives including Vermont Sen. Bernie Sanders, One Fair Wage has organized in cities across the country and has pressured local lawmakers to take action against the tipped minimum wage, feeling the practice was archaic and both sexist and racist. The campaign found success in Chicago, which passed an ordinance in October 2023 to gradually eliminate the tipped minimum wage by 2028. The measure was viewed as a compromise as the group and the City Council worked with the Illinois Restaurant Association.

University of Michigan law professor Samuel Bagenstos is a One Fair Wage ally who sent a letter to Senate Majority Leader Winnie Brinks and House Speaker Matt Hall.

“Now, the Legislature is considering once again whether to enact amendments that would dilute the effect of the initiatives it adopted into law in 2018. In my view, doing so would simply compound and reinforce the Legislature’s original action to undermine the people’s power of initiative,” Bagenstos writes.

Bagenstors warns that amending the minimum wage and sick leave laws before they’ve been implemented would be a repeat of a maneuver deemed unconstitutional in a 2024 Michigan Supreme Court ruling and would undermine the state’s constitutional protections for citizen-led initiatives.

The state’s restaurant lobby has pushed to preserve the tipped minimum wage, arguing that implementing the changes will result in job losses and could force small businesses to close, spelling catastrophe. Meanwhile, labor groups say that this latest move could erode public trust and worker protections.

from Eater Detroit - All