The minimum wage in the state of Michigan increased on the first day of the year as scheduled, but that number may jump even higher in the coming months due to a looming court decision.
At the start of the new year, Michigan’s minimum wage increased to above $10 an hour for the first time in the state’s history. As of Jan. 1, 2023, minimum wage employees in the Great Lakes State are subject to earn $10.10 per hour -- up from $9.87 in 2022 -- while tipped employees have a minimum wage of $3.84 an hour.
Those numbers could increase even more this year due to a minimum wage proposal adopted, in part, by the Michigan Legislature in 2018 -- a move currently under review in court.
Back in 2018, national advocacy group One Fair Wage sought to increase Michigan’s minimum wage to $15 an hour over the course of a five-year schedule. Under that plan, minimum wage would have exceeded $12 an hour in 2022, $13 an hour in 2023 and so on, and then it would have been indexed after that five-year period -- meaning the wages would automatically increase each year at a percentage that accounts for inflation, so the wage amount never loses its value.
Ahead of the 2018 election, the group submitted signatures showing significant support for the initiative. But before the proposal could go in front of voters on Election Day, the Michigan Legislature adopted the proposal and made it law, as it has the authority to do.
However, lawmakers changed the language of the proposal when they adopted it. Rather than reaching a minimum wage of $12 an hour by 2022, the legislature changed the year to “2030,” expecting to reach an hourly wage rate of $12.05 by that year.
The proposal also included a significant rise in minimum wage for tipped workers, increasing their wage to above $11 by 2023. Michigan lawmakers nixed that part of the proposal.
Experts say there was enough voter support to pass the 2018 minimum wage proposal before the state’s Republican-controlled legislature stepped in and undercut the measure. The state’s minimum wage has since been increasing slightly each year on a fixed schedule.
Related: Group seeking to raise Michigan’s minimum wage submits signatures for 2024 ballot amid legal battle
The group behind the 2018 proposal has since sued, arguing that the Michigan Legislature did not have the authority to change the language of the proposal the way that it did. The courts have sided with those behind the proposal, with a Michigan Court of Claims judge ruling in July 2022 that the legislature’s changing of the language was unconstitutional. That ruling was appealed by state lawyers.
The issue has gone back and forth in the court system, and is expected to continue to do so. All are currently waiting on the Michigan Court of Appeals to make a decision, which is expected by February of this year. However, it is likely that any ruling will be appealed to the state’s supreme court for a final ruling.
UPDATE: Appeals court blocks minimum wage hike in Michigan, sides with Legislature
Why it matters
While the 2018 proposal garnered a lot of support, there are many against significant wage hikes, especially business owners. Those employing tipped workers say they’re concerned about what a jump from $3.84 an hour to more than $11 an hour in wages would mean for their business.
Economic analyst David Cooper, with the Economic Policy Institute, told us last year that it is important not to raise the minimum wage too quickly, as businesses could struggle to afford their existing staff and may have to let people go, which is not ideal. Rather, it’s important to set a rate that gives businesses time to adjust.
Still, the minimum wage does need to increase in order to catch up with inflation and the cost of living. And research shows that a majority of voters, both Democrats and Republicans, support minimum wage increases.
Research also shows that if the minimum wage was raised to $15, more than 60% of people who are working and are in poverty would have seen a raise. Such a rise would have also reportedly lifted 3.7 million people, including 1.3 million children, out of poverty, based on pre-pandemic labor market conditions, Cooper said.
Even though not every U.S. worker is paid the minimum wage, everybody is affected by the minimum wage rate.
“Seventy percent of the U.S. economy is consumer spending, people buying things,” Cooper said. “If you have a huge portion of the population being paid so little that they can’t afford things, that’s a lot of customers that don’t have money to spend.”
Keeping the minimum wage low keeps the economy from growth, according to Cooper. Businesses would see more customers purchasing goods and services if there was more money floating around.
And the benefits of raising the minimum wage aren’t just economic, Cooper said. A higher minimum wage is associated with better public health, less smoking, increased birth rates and lower teen pregnancy rates.
Read more on this: Minimum wage: How we got here and why it’s not working