Michigan tipped wages: Senate passes bill to change how much pay will increase
Michigan Senate passes tipped wages bill
The next step for the bill is getting through the Michigan House, or else tipped wages will increase next week.
LANSING, Mich. (FOX 2) - As the date for tipped worker wages to increase nears, the Michigan Senate passed legislation that modifies the increase amount and schedule.
Senate Bill No. 8 passed 20-12 on Thursday. This bill would push next week's wage increase until Jan. 1, 2026, with wages increasing annually on the first of each year until they reach 50% of the minimum wage in 2031.
The bill would also increase the minimum wage yearly until it reaches $15 in 2027 - a year earlier than planned.
This bill does not address mandatory paid sick time, another contentious issue among lawmakers and business owners.
Michigan tipped worker wage
By the numbers:
Originally, tipped workers' wages were slated to increase yearly until meeting the minimum wage in 2030.
If the bill does not pass the Michigan House, tipped wages will increase nearly $2, to $5.99, on Feb. 21 and will continue to rise each Feb. 21 until 2030.
However, if it passes the House, tipped wages will increase to 40% of the minimum wage next January, with gradual increases each year. Currently, tipped workers make 38% of minium wage - $4.01.
New tipped wage increase schedule:
Jan. 1, 2026 – 40% of minimum wage
Jan. 1, 2027 - 42% of minimum wage
Jan. 1, 2028 - 44% of minimum wage
Jan. 1, 2029 - 46% of minimum wage
Jan. 1 2030 - 48% of minimum wage
Jan. 1, 2031 - 50% of minimum wage
Michigan minimum wage
By the numbers:
Regardless if the bill passes the House, the minimum wage will rise to $12.48 on Feb. 21.
However, the bill will alter the amount of subsequent increases.
New minimum wage increase schedule
Feb. 21, 2025 - $12.48
Jan. 1, 2026 - $13,73
Jan. 1, 2027 - $15
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.
What they're saying:
Lawmakers on both sides of the aisle, as well as the Michigan Restaurant & Lodging Association (MRLA), which was vehemently against increasing the tipped wage to meet the minimum wage, praised the new legislation.
"When I sat down with workers and small business owners to discuss the importance of Michigan’s tipped wage system, our political differences didn’t matter — what mattered was finding a solution that allows small businesses to thrive and keep their doors open," said Sen. Kevin Hertel (D-St. Clair Shores), who sponsored the bill. "Crafted with those perspectives in mind, this legislation protects and improves Michigan’s tipped wage, so workers earn a good living while small businesses have the stability they need to continue serving our communities."
Restaurant owners have expressed fears about how their businesses would operate if they had to pay servers more money. The MRLA has been an outspoken force regarding the issue, and has said that if the tipped wage continues to increase to minimum wage, one in five Michigan restaurants would be forced to close.
Michigan restaurants prepare for pay increases for workers with new laws
For many workers, it’s a great way to start the new year. Michigan’s minimum wage will increase twice in 2025.
"Today marks a significant victory for Michigan's hospitality industry and the tens of thousands of servers, bartenders, and restaurant workers who depend on the tip credit system for their livelihoods. Through exemplary bipartisan cooperation, our legislative leaders have demonstrated their commitment to preserving both jobs and businesses across our state," MRLA President and CEO Justin Winslow said after the updated bill passed the Senate.
Senate Republican Leader Aric Nesbitt (R-Porter Township) said the amended wage changes would help save 50,000 jobs.
"This bipartisan compromise is a successful first step in finding a solution to save the businesses that make Michigan great. I also look forward to working toward a resolution that will allow our businesses to continue providing reasonable, responsible and flexible paid leave time for hardworking families," he said. "Michigan’s diverse economy cannot afford heavy-handed one-size-fits-all mandates. Let’s finally solve these issues and prevent this looming economic disaster from wreaking havoc on our state."
What's next:
The bill now heads to the House.
As noted, if it doesn't pass the House, tipped wages will increase next week.
In the meantime, lawmakers will continue to work to reach a compromise regarding sick time.
The Source: This story was written using the passed version of Senate Bill No. 8, previous FOX 2 reporting, and press releases from Kevin Hetel, Aric Nesbitt, and the MRLA.