What the ruling means for workers
The Supreme Court determined the original minimum wage and paid leave proposals from 2018 will take effect on Feb. 21, 2025.
This means Michigan’s current $10.33-an-hour minimum wage will get hiked by at least $2 an hour next year, putting the new standard at around $12.50 an hour. The minimum wage will also continue to increase over the following three years and then get tied to inflation — so by 2028, it will reach about $15 an hour.
Tipped workers, who currently make $3.93 an hour, will see their wages increase as well, to about $6 an hour next year. The tipped minimum wage will be 48% of the traditional minimum wage and will gradually increase to 100% over five years after 2025, bringing tipped workers on par with regular minimum wage workers.
“It’s not realistic to rely on a business model where you only have to partially pay your labor force, which, in most every job, is the main driving force of that industry,” Godwin Ihentuge told Detroit News.
Ihentuge, chef and owner of Afro-Caribbean restaurant Yum Village in Detroit, believes higher pay will improve workers’ quality of life and lower pressure on tipped employees to put up with inappropriate behavior from customers because they need the extra money to make ends meet.
Under the Earned Sick Time Act, mandatory paid leave will increase from 40 to 72 hours in February 2025 — and businesses with fewer than 50 workers will no longer be exempt from offering paid sick leave as well.
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Critics say increasing pay could have major ramifications
“The ramifications of this decision will be deep and felt by job providers and workers alike,” said Wendy Block, senior vice president of business advocacy for the Michigan Chamber.
Block believes it will be difficult for businesses to “absorb this large of an increase in their labor costs or how employers will make the required sweeping and costly changes to their leave policies without drastically cutting back elsewhere.”
Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association, says the Supreme Court ruling could force more than 1-in-5 full-service restaurants in the state to close permanently, costing up to 60,000 jobs.
“Today’s tone-deaf ruling by the Michigan Supreme Court strikes a likely existential blow to Michigan’s restaurant industry and the nearly 500,000 workers it employs,” Winslow said in a statement.
However, Justin Wolfers, an economist and professor of public policy at the University of Michigan, told The New York Times that the court’s decision to gradually phase in higher wages gives businesses time to adapt.
And James Hawk, a Detroit bartender who was a plaintiff in the case, said he wasn’t worried about fewer employment opportunities or tips from customers.
“If the sky doesn’t fall, that means we’re moving in the right direction,” Hawk told The Times.
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