The Michigan Court of Appeals on Thursday overturned an order from a lower court that would have allowed the state’s minimum wage to increase even more this year than it already has.
The appellate court was hearing a case brought against the state regarding a minimum wage proposal that was adopted, in part, by the Michigan Legislature in 2018. In an expedited decision handed down Thursday, Jan. 26, appellate Judge Christopher Murray said the Legislature did not overstep its authority when amending that proposal before adopting it.
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 every year at a rate that accounts for inflation, so the salary would never lose 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.
The group behind the 2018 proposal has since sued, arguing that the then-Republican led Michigan Legislature did not have the authority to change the language of the proposal the way that it did. The courts had previously 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, pushing the case to the state’s Court of Appeals.
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.
In his decision Thursday, which takes “immediate effect,” appellate Judge Murray said the Legislature has the authority to “legislate as it sees fit.” Meaning: The state’s hourly minimum wage will remain at $10.10, and will not increase to reflect what was in the initial version of the 2018 proposal.
“... unlike Congress that was delegated specific limited authority under the federal Constitution, under the state Constitution the Legislature is free to legislate as it deems appropriate unless specifically prohibited from doing so under the state or federal Constitutions,” the decision reads, in part.
“As defendants and their amici argue, the pivotal question is not, as the trial court considered it, whether the Legislature was granted the power to adopt and then amend an initiative proposal during the same legislative session,” Murray continued. “Instead, under long-settled law ... the germane question is whether there was a constitutional provision precluding it.”
You can read Judge Murray’s entire decision down below.
The Court of Appeal’s decision is expected to be appealed, which could bring the issue to the Michigan Supreme Court for a final ruling on the issue.
Why does minimum wage matter?
The 2018 proposal garnered a lot of support from Michigan voters, but 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 in Michigan and across the country.
Research also shows that if the minimum wage was raised to $15, as was proposed by now-President Joe Biden during his campaign, more than 60% of people who are working and are in poverty would see a raise. Such a rise could 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
Below is Thursday’s Court of Appeals decision: