The Michigan House voted on a bill Wednesday to stop a court-ordered phase out of the lower minimum wage for workers who receive tips from customers. The legislation received bipartisan support in the Michigan Senate last week, prompting applause from the restaurant industry and anger from labor groups calling it a betrayal of workers.
Senate Bill 8 would gradually increase the tipped minimum wage from 38% to 50% of the regular minimum wage by 2031. It passed the House 69-40. All but four GOP lawmakers voted for the bill while most Democrats voted against it.
The legislation preserves a system in which workers who receive tips can earn a lower minimum wage with customer gratuities closing the gap between the tipped minimum wage and the regular minimum wage. If tips don’t make up that shortfall, however, the employer must pay the difference.
Most states have a lower minimum wage for tipped workers — only seven do not. The Michigan Restaurant and Lodging Association says it would be a mistake for Michigan to join them, predicting job losses and business closures. Minimum wage experts, on the other hand, don’t anticipate a severe economic fallout, saying servers could end up taking home more money from tips and might stay at their jobs longer, with wage increases expected to reduce industry turnover.
The minimum wage legislation could soon head to Gov. Gretchen Whitmer for her signature. Last week, Whitmer called on lawmakers to reach a bipartisan deal on the contentious issues of minimum wage and paid sick leave before court-ordered changes on both policies are to take effect Friday. She floated the possibility of extending negotiations, but lawmakers instead continue to scramble to reach an agreement ahead of the Friday deadline.
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“Can you believe this? Politicians, they work until the last minute to try to negotiate a deal,” House Speaker Matt Hall, R-Richland Township, told reporters Wednesday, noting that House Republicans stormed off the floor in December in the hopes that their protest would force votes on minimum wage and sick leave bills. That never happened. But when Republicans took control of the chamber in January, bills on those issues were the first they introduced.
In July, the Michigan Supreme Court ruled Republican lawmakers acted illegally in 2018 when they adopted initiatives on minimum wage and paid sick leave to circumvent a statewide vote on the measures, and later watered down the proposals. The court ordered the original initiatives to take effect starting Feb. 21.
While lawmakers in both chambers have now voted on the minimum wage legislation, negotiations over paid sick leave remain ongoing, Hall said Wednesday.
What would the Michigan minimum wage legislation do?
Under the Michigan Supreme Court’s order, the standard minimum wage would immediately increase from $10.56 to $12.48 on Feb. 21. It would increase to $13.29 in 2026, $14.16 in 2027 and $14.97 in 2028, with subsequent increases tied to inflation.
The court’s order also would increase the tipped minimum wage, increasing it from 38% of the regular minimum wage to 48% starting Feb. 21, 60% in 2026, 70% in 2027, 80% in 2028 and 90% in 2029. The court order eliminates the tipped minimum wage in 2030.
Senate Bill 8 would increase the standard minimum wage more quickly than the court’s order: Like the court’s order, it would start by raising the minimum wage from $10.56 to $12.48 Feb. 21. But it would then increase the minimum wage to $13.73 in 2026 and $15 in 2027, with subsequent increases tied to inflation.
In 2023, about 17% of jobs in Michigan paid under $15 an hour, according to the Michigan Center for Data and Analytics. But the debate over the tipped minimum wage and its impact on the restaurant industry has dominated the discussion in Lansing. No publicly available data exists on the exact number of Michigan workers earning the tipped minimum wage.
On the tipped minimum wage, Senate Bill 8 would increase it to 40% of the regular minimum wage in 2026, 42% in 2027, 44% in 2028, 46% in 2029, 48% in 2030 and 50% in 2031, where it would remain. Hall took credit for proposing a 50% tipped minimum as a compromise. It’s not as high as Michigan’s tipped minimum wage has stood in the past. It once stood at 75% of the minimum wage starting in the late 1960s, until lawmakers amended the minimum wage law a few decades later.
Vote breakdown on minimum wage legislation
The minimum wage compromise saw some drop off in GOP support while winning over some Democrats.
Last month, the House voted to keep the tipped minimum wage at 38% of the regular minimum wage. That bill received the support of every Republican lawmaker in the House and the support of six Democratic lawmakers. But 54 out of the chamber’s 58 GOP lawmakers voted Wednesday on Senate Bill 8 to increase the tipped minimum wage to 50% of the regular minimum wage. GOP state Reps. Steve Carra, of Three Rivers; James DeSana, of Carleton; Brad Paquette, of Niles, and Josh Schriver, of Oxford, were the lone Republican votes against the bill. Fifteen Democrats in the Michigan House supported the measure.
Senate Bill 8, introduced by Democratic state Sen. Kevin Hertel, of St. Clair Shores, needed Republican votes to pass in the Senate last week. Most Democrats, who hold a majority in the chamber, voted against the bill.
State Sen. Rosemary Bayer, D-West Bloomfield, was among them. Bayer said she worked as a waitress while in college. She said she didn’t stay in the job for long, but it was enough time for her to understand the job is hard with low, unpredictable pay. “It drove me crazy,” she said. “You never knew what tips you were going to get.”
One potential hiccup: The state Senate needs at least 25 votes for the bill to take immediate effect. Only 20 senators voted for the bill. Denying the bill immediate effect is a procedural move that would delay the implementation of the legislation, allowing the court-ordered minimum wage changes to take effect Friday.
Michigan minimum wage fight: Restaurant disaster or worker boon? Tipped minimum wage debate has dominated Lansing
Next steps
Lawmakers have connected minimum wage and paid sick leave discussions by adding a provision in Senate Bill 8 that says the minimum wage legislation won’t take effect unless House Bill 4002 on paid sick leave does too. The House approved the paid sick leave bill, but Hall said he’s working with Senate Democrats on changes he hopes to see approved by lawmakers from both parties soon.
Contact Clara Hendrickson at [email protected] or 313-296-5743.
This article originally appeared on Detroit Free Press: Michigan House passes bill to keep lower tipped minimum wage
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