by Scott McClallen
Some Michigan businesses are scrambling after a Court of Claims ruling says the minimum wage should increase from $9.87 to $12 after the Court declared the GOP’s 2018 circumvention of two voter-initiated ballot initiatives as unconstitutional.
A restaurant group estimates this change would hike labor cost inflation by 156%.
In 2018, the GOP-dominated Michigan Legislature adopted two ballot initiatives: one to raise the minimum wage to $12 by 2022 tied to inflation and eliminate a lower tipped wage, and another to require employers to provide paid sick leave. But the Legislature weakened the initiatives that former Republican Gov. Rick Snyder signed into law.
Michigan’s current minimum wage for tipped workers is $3.75.
Court of Claims Judge Douglas Shapiro “voided” the GOP’s amended initiative and said the original initiatives “remain in effect.”
“The new laws, therefore, substantially amended the original laws proposed by the voters,” Shapiro wrote. “The process effectively thwarted the intent of the people and denied them the opportunity to vote on whether they preferred the voter-initiated proposal or the Legislature’s suggested modifications.”
Wendy Block, the Michigan Chamber of Commerce’s vice president of Business Advocacy and Member Engagement, said the ruling could have a “crippling effect” on Michigan employers and employees.
“The talent shortage has employers already paying historic wages and benefits – all while facing rising inflation and supply chain chaos – just to keep the doors open,” Block said in a statement. “Employees should be equally concerned about the cost pressures this decision will place on businesses and the impact it could have on employee hours and benefits. We believe time and energy should focus on ways to help job providers fully rebound from COVID impacts and workers overcome barriers to employment like ensuring affordable childcare, housing and transportation.”
Block said the Chamber will be reviewing the decision and mapping its options.
Michigan Attorney General Dana Nessel welcomed the ruling.
“This order is a victory for the residents of Michigan whose efforts to bring an issue before their elected representatives were wrongly circumvented by the Legislature in 2018,” Nessel said in a statement. “The initiated law process is intended as a tool for the people. As Judge Shapiro noted in his opinion, the constitution ‘grants the Legislature three options to address a law proposed through the initiative process – enact the law, reject the law, or propose an alternative. Article 2, § 9 does not permit the Legislature to adopt a proposed law and, in the same legislative session, substantially amend or repeal it.’
Michigan Restaurant & Lodging Association President & CEO Justin Winslow, said that the ruling would hike labor cost inflation by 156% on restaurant operators, causing “significant” layoffs and instant price increases.
“If the 2018 proposals are allowed to be implemented as originally crafted, restaurant operators would immediately experience 156% labor cost inflation at a time when their recovery is already tenuous and the average wage for tipped employees in Michigan is currently $24 per hour,” Winslow said in a statement. “The inevitable result would be instantaneous menu price increases and significant layoffs during peak travel season. And those operators still indebted from over 400 days of dining room closures and occupancy restrictions that barely survived the last two years would be forced to close their doors permanently.”
The ruling follows inflation increasing by 9.1% year-over-year, the largest spike in 41 years.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Fight for $15 Minimum Wage” by Fibonacci Blue. CC BY 2.0.
