Hundreds of individuals in the service industry gather on the Michigan state Capitol steps on Wednesday to rally for lawmakers to preserve tipped wages as the state is set to phase out tipped wages in the next few years.
(Anna Liz Nichols photo)
LANSING — Michigan is set to phase out tipped wages next February and it’s a change bartenders and servers didn’t ask for and never wanted, Grand Rapids-area café owner Lu Hayoz told a crowd of service workers on the Michigan State Capitol lawn on Wednesday.
The Michigan Supreme Court issued an opinion at the end of July that will result in the elimination of tipped wages below minimum wage and will increase minimum wages in February to more than $12 per hour.
Individuals who advocated for raising tipped wages may think they’re helping, but they’re hurting workers, Hayoz said. Business owners will have to lay off workers and servers will leave the industry when faced with making less than they did with tips, she said.
“We all get into this business knowing full well what we earn per hour, and it’s up to us through our hard work to earn a well above minimum wage income,” Hayoz said. “When this happens in February and goes down, this will change the restaurant industry forever and not in a good, positive way.”
The Supreme Court issued a clarification Wednesday requested by state officials. The court said that starting in 2025, the minimum wage will increase each year based on an inflation-adjusted minimum wage rate. Between 2025 and 2030, tipped wages will inch up and be at the same level by February 2030.
The minimum wage is set to rise to $12.48 in February 2025, $13.29 in 2026, $14.16 in 2027 and $14.97 in 2028.
Michigan currently has a $3.93 minimum wage for tipped workers that will gradually increase until 2030.
About 91% of restaurant owners in a survey published by the Michigan Restaurant & Lodging Association in September 2022 say they will have to raise menu prices and room rates if minimum wages increase. About 58% respondents said they’d have to lay off employees to offset the required increases in wages.
There’s an estimated 50,000 jobs at risk of being eliminated as businesses adapt to eliminating tipped wages, state Sen. John Damoose, R-Harbor Springs, told the crowd. This is “just a plain old big deal” that will requires Republicans and Democrats in the state Legislature to come up with some compromise to save jobs and ensure tipped workers can continue making liveable wages.
“This is something we can’t play politics on and I see Republican and Democratic legislators out here who came specifically today, and we’re not even in session today. They came because of you who want to work together on this,” Damoose said. “Sadly, for whatever reason, though, we’re in a state where we’re not meeting much. … We’re not having session probably much in October because of this crazy election and all that’s going on.”
In July, the Supreme Court determined in a 4-3 opinion that in 2018 the then GOP-controlled Legislature moved to “adopt-and-amend” citizen-led ballot initiatives to increase minimum wage and mandate sick leave for workers. The adoption of the measure kept the ballot initiatives off the ballot only for the legislature to shortly after the election par down the changes.
Court of Appeals Judge Michael J. Kelly had written that the “adopt-and-amend” strategy was a “direct assault on one of the rights our founding fathers and the drafters of our state Constitution held dear,” adding that, “when the history of this Legislature is written, it is difficult to imagine anybody saying that this was their finest hour.”
Republican lawmakers immediately expressed concerns for the implications of the Michigan Supreme Court’s opinion which sets Michigan’s minimum wage to increase from $10.33 an hour to more than $12 an hour in February and increase legal tipped wage over the next few years to increase to the same level. Sen. Thomas Albert, R-Lowell, has introduced legislation that would reduce the minimum wage increase and keep the current structure for the minimum wage for tipped employees.
Democratic legislative leadership has supported the court’s condemnations of the “adopt-and-amend” maneuver, but have been quiet about the possibility of adapting the changes to address the concerns of groups like Save MI Tips, which opposes eliminating tipped wages. Unions have backed the minimum wage increase.
Plenty of people are totally on board with raising the minimum wage, Hayoz said, as everyone deserves to live comfortably. But for tipped workers who’ve made a career out of service, their hope is that tipped wages could be left alone to avoid businesses having to raise their prices, and customers having less financial wiggle room to leave the tips they want to give.
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