Minimum Wage Compromise Reached (Updated 6/6/2014)
The Michigan Restaurant Association (MRA), as well as other business trade associations in Lansing, faced some tough decisions recently regarding how to deal with Michigan’s minimum wage. Below is the process that resulted in the final compromise that was signed into law by the Governor in May.
The minimum wage issue is one that seems to raise its head every eight to ten years in Lansing. It was debated last in 2006. At that time proponents of a wage hike began circulating petitions to raise the wage. Republicans in the legislature, not wanting that issue on the November 2006 ballot, agreed to a compromise that raised the wage and avoided a costly fight.
This year began much the same as 2006. However, there were different players and some factors that made it more challenging to reach a compromise than in 2006. In February, Raise Michigan, a coalition formed to raise Michigan’s minimum wage, filed their petition language with the Secretary of State. The proposal not only raised the minimum wage to $10.10 over the next three years, it completely eliminated the tipped wage in Michigan. Historically, proposals to increase the minimum wage have been successful in nearly every state they have appeared on the ballot, despite the amount of money spent trying to defeat them. Since 1996, fifteen proposals to raise the minimum wage have appeared on ballots throughout the country and have failed to pass only twice. And in the two states where they were defeated, the proposals eventually passed on follow up attempts.
The Situation in Michigan
In Michigan, polling numbers showed that support for raising the minimum wage was high. A poll commissioned by the Detroit Free Press in early March showed the proposal to increase the wage to $10.10 an hour was supported by 65 percent of the voters.
Based on recent Michigan ballot fights, the cost to legitimately challenge this proposal at the November ballot was estimated between $10 and $15 million. And spending that amount would not remotely guarantee victory.
The MRA Strategy
During weekly meetings of the MRA’s Government Affairs Committee, a strategy was developed to combat the Raise Michigan proposal. Key to that strategy was keeping the proposal off the November ballot, which meant the MRA needed to ask the Michigan Legislature for help. Lobbying efforts were ramped up and meetings were held with more than 100 legislators over five weeks, where they were educated on the finances of the restaurant industry and particularly on how the elimination of the tipped wage would put many of MRA members out of business. We pleaded with them to act to save many Michigan businesses and jobs. Several MRA members were key to this process with many of them personally meeting with legislators.
Public Act 138 of 2014 – Legislative Compromise
On May 27, Governor Snyder signed into law Senate Bill 934 after it was passed by the legislature. While this new law is certainly not ideal, it is much better than the original Raise Michigan proposal. The minimum wage and tipped wage will go up over the next four years, but at a more responsible rate. There are also those that believe that we may avoid future minimum wage battles since the compromise includes future increases indexed to the rate of inflation.