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The Michigan minimum wage is about to go up - here's why
A complicated court case was finally settled in Michigan's high judicial office. It had to do with the constitutional bounds of a legislature. But it's workers and business owners that will feel the effects.
(FOX 2) - The Michigan minimum wage will go through two updates in 2025, rising once because of a regularly scheduled increase at the beginning of the year and another due to a supreme court ruling that dropped last summer.
In addition to raising the wage, the ruling also phases out the state's tipped wage system while expanding paid sick time laws.
The updates to the state's wage laws are years in the making and track back to a legislative session in 2018.
Michigan Minimum Wage
What we know:
The Michigan minimum wage already rose once on Jan. 1, due to its usual scheduled increase. That increase went from $10.33 an hour to $10.56 an hour.
The second rise will be more substantial, going up to $12.48 an hour.
Meanwhile, workers that earn tips will see their minimum wage increase to $5.99 an hour.
The February increase is part of an order from the state Supreme Court, which in 2024 ruled a decision to adopt a ballot proposal dealing with the minimum wage before amending how much it would alter Michigan's payment laws for its workers was unconstitutional.
The decision ordered the state to return the wage increase to the schedule written in the ballot proposal back in 2018.
Proponents of increasing the state's wage saw the decision as a major victory for workers, while small businesses are fretting the wage hike could mean economic pain of their own.
The backstory:
In 2018, a ballot proposal that called for raising Michigan's minimum wage was set to go before voters.
However, the Republican-majority legislature decided that instead of allowing the initiative to go on the midterm ballot in November, it would directly adopt the proposal into law.
Then, during the lame duck session - the period of time after election day but before the new governing session took effect - the legislature watered down the proposal.
The decision was the subject of a legal case that took years to move through court system. Eventually, the Democratic-led high court ruled the decision was unconstitutional.
In addition to updating the state's minimum wage, the proposal also increased paid sick time while doing away with the current payment structure for workers that earn tips.
By the numbers:
Michigan's minimum wage increase will follow a schedule of annual increases, starting in February. It will raise the rate by nearly $2.
The state has laid out a schedule going through 2028.
- Feb. 21, 2025 - Rising to $12.48 an hour
- Feb. 21, 2026 - Rising to $13.29 an hour
- Feb. 21, 2027 - Rising to $14.16 an hour
- Feb. 21, 2028 - Rising to $14.97 an hour
Tipped employees will also see an increase in their hourly rate. According to the Michigan Treasury, tipped workers will make 100% of the minimum wage by 2030.
- Feb. 21, 2025 - Tipped wage will be $5.99
- Feb. 21, 2026 - Tipped wage will be $7.97
- Feb. 21, 2027 - Tipped wage will be $9.91
- Feb. 21, 2028 - Tipped wage will be $11.98
The other side:
While advocates of workers and those who have pushed to raise the minimum wage welcomed the ruling, the business community is worried about what fiscal impacts raising the wages will have on their bottom line.
Republicans more sympathetic to the business community are expected to address the scheduled increase during their session in Lansing this year after conservatives retook control of the Michigan House.
That includes creating a new committee while promising to "fix" the state's tip credit layout.
"We’ve heard from countless hardworking small business owners and their dedicated employees about what this ruling would mean for them. It would be a catastrophe," said state Rep. Jay DeBoyer (R-Clay Township) in a release.
Midland Republican Bill Schuette will chair the committee, called the "Select Committee on Protecting Michigan Employees and Small Businesses."
In their first week of governing, the House GOP has introduced several bills that impact the state supreme court ruling, including slowing down the current schedule of wage increases, keep in place the tipped wage rate at 38%, while also blunting the new sick leave requirements.