We usually use this newsletter to discuss national news. But this week, we’ve decided to buck tradition by spotlighting what’s going on right now with wages in Michigan – and explain why the outcome of this state-level battle has serious implications for the Democratic party as a whole.
We’ll start with some backstory. In the summer of 2018, Michigan voters approved an initiative to appear on the ballot that would have gradually increased the state’s minimum wage to over $12 an hour by 2022 and phased out the state’s subminimum tipped wage entirely by 2024. However, the initiative never ended up appearing on the state ballot in the 2018 election because, that September, the GOP-controlled state legislature voted to adopt it outright.
But then the Michigan legislature did something sneaky. In the same legislative session, they voted to significantly alter the measure. In what was a major blow to Michigan’s low-wage workforce, they stretched out the $12 minimum wage increase to 2030 and kept the tip credit at 38% of the full minimum wage. (It’s worth noting that they also altered similar voter-approved legislation regarding paid sick leave, but for the purpose of this newsletter, we’ll focus on wages.)
Fast forward to this past summer. On July 31, 2024, the Michigan Supreme Court ruled that the 2018 legislature’s “adopt and amend” strategy was unconstitutional. The Court ordered the original law to go into effect on February 21, 2025, with adjustments for inflation. The state’s minimum wage is now scheduled to reach $15 an hour by 2028 and the subminimum tipped wage will be phased out by 2030. In February, the minimum wage is set to jump to $12.48 an hour while the tipped minimum will be $5.99. Our allies at One Fair Wage estimate that this will ultimately raise wages for about 1.2 million workers in Michigan.
It would be nice if the story ended there, but unfortunately, it doesn’t. In the last election cycle, Michigan Republicans assumed the majority in the state House while Democrats retained control of the Senate and the governorship. Last week, House Republicans introduced a bill that would slow down the rate at which the minimum wage increases, pushing $15 back to 2029, and scrapping the removal of the subminimum tipped wage entirely – instead keeping it at just 38% of the full minimum. (For context, the tipped minimum wage is $4.01 right now.) Considering that this was their very first order of business in a new legislative session, it’s clear where their priorities lie!
Believe it or not though, it gets worse. Despite repeated assurances from Democratic leadership that Democrats would not touch the original voter-approved legislation, it’s looking increasingly likely that they will do just that after Senate Majority Leader Winnie Brinks signaled her openness to a deal. That’s because Democratic Senator Kevin Hertel introduced a bill on the same day as House Republicans which would speed up the $15 minimum wage increase to 2027, which is a welcome change, but also pare back the original law by keeping the tipped minimum wage at 60% of the regular minimum.
Our position on this mess is that Michigan Democrats need to stand firmly against any and all “compromises” when it comes to the tipped minimum wage – it’s a vestige of slavery that belongs in the past. The Senate should not pass Hertel’s bill and, if it comes to it, Governor Whitmer should refuse to sign either Republicans’ or Hertel’s bills if they reach her desk. In the end, if Michigan Democrats want to entertain any changes to their original bill, they should be improvements, not rollbacks.
Part of the reason we feel this way has to do with morals and ethics. We think it’s wrong that tipped workers have to rely on the often unpredictable charity of customers to get by. We think it’s wrong that any worker, tipped or not, can work full-time and still not make enough money to afford basic essentials. And in Michigan’s case, we think it’s beyond the pale that the will of voters was – and is now again – being blatantly ignored and that wage justice is being denied for thousands of tipped workers in Michigan, who are predominantly women and people of color.
We’re also not afraid to admit that we’re a bit selfish here too, as raising wages is what’s best for business owners like many of us. While some business leaders in Michigan and associations like the National Restaurant Association claim that increasing the minimum wage and eliminating the subminimum tipped wage will kill jobs and close shops for many, we know this not to be the case. Research has found that better-paid workers are more productive and loyal to their companies, which in turn boosts profits. Workers are also more likely to spend their higher incomes in their local economies, which spurs growth. Regarding tipped wages, research has also found that, in the eight states that mandate tipped workers be paid the full standard minimum wage with tips on top, servers and bartenders have higher take-home pay and experience lower levels of poverty compared to other states. They also have experienced higher restaurant industry growth, both in terms of number of restaurants and jobs.
Two of our members, John Driscoll and Morris Pearl, lay this argument out in full in their newly published book, Pay the People! Why Fair Pay is Good for Business and Great for America. You can order your copy of the book from Barnes & Noble, Amazon, or Bookshop and visit paythepeople.com to learn more.
The Patriotic Millionaires wanted to get more involved in the Michigan fight over wages, which is why Morris and our Director of Partnerships, Catherine Hadley, sent a letter directly to Governor Whitmer, Senate Majority Leader Winnie Brinks, and the whole Michigan Senate Democratic Caucus earlier today urging them to reject the newly proposed rollbacks of wages and paid sick leave. You can read the letter HERE.
The national Democratic Party is facing a pivotal moment this week, as it conducts its first in-person forum to select the new leader of the Democratic National Committee (DNC) – and in Detroit, Michigan, no less! To turn over a new leaf in the party’s history and win back working-class voters, it is imperative that Democrats elect a new DNC Chair that is unabashedly committed to economic justice. They must say “no” to the years of failed neoliberal policies like tax cuts for the wealthy and corporations and free trade deals like NAFTA, which have decimated America’s once enviable industrial base and brought us the worst inequality we’ve seen in over a century. Instead, they must say “yes” to a new economic vision that centers the interests of working people.
But before they can rebrand with a new national chair, Democrats need to put their money where their mouth is and get their act together in Michigan. A $15 minimum wage still falls short of meeting the cost of living in the state, but progress is progress, and Democrats must not waver in protecting it and delivering on it for thousands of Michiganders. It’s the only way to show voters both in the Wolverine State and around the country that they’re serious about being the party of working people.