When it comes to legislative action on the hot poker issue of the minimum wage, the federal government may be gridlocked but not so the Michigan Legislature. On May 27, the Michigan Legislature passed and Governor Snyder signed the Workforce Opportunity Wage Act, which provides a series of stepped up increases to the state’s minimum wage through 2018 and beyond.
With the current minimum wage at $7.40, Michigan workers will see the first increase in September when the minimum wage jumps to $8.15. From there, it increases to $8.50 on January 1, 2016; to $8.90 on January 1, 2017; and to $9.25 on January 1, 2018.
So why has Michigan been able to achieve what the politicians in Washington argue over ad infinitum but do nothing about? Ironically Michigan is the first state with a majority Republican legislature that has raised its minimum wage this year. Republicans actually agreed to raise the minimum wage to pre-empt a November ballot initiative which would have raised it even higher to $10.10 an hour by 2017. So although the minimum wage will indeed rise, Republicans have managed to achieve an increase of more modest proportions than many Democrats sought.
After 2018, minimum raise increases will be handled according to a formula. The minimum wage will increase each year on April 1 based on the average annual increase in the Consumer Price Index (CPI) for the Midwest Region for the most recent five-year period, up to a maximum increase of 3.5 percent per year. No increase will take place, however, if Michigan’s unemployment rate has been over 8.5% for the preceding year. This provision is deemed a win for Democrats in that in that it provides an automatic yearly increase tied to inflation which will hopefully render future regular tooth and nail battles with Republicans over the minimum wage unnecessary.
Additionally the new law increases the hourly minimum wage for tipped employees to $3.52 up from the existing $2.65. Employers may set a training wage for new employees under age 20 of $4.25 per hour for the first 90 days of employment. Thereafter new employees under 18 years of age may be paid at 85% of minimum wage.
The Workforce Opportunity Wage Act is projected to affect up to 96,000 Michigan workers who earned at or below the minimum wage in 2013, which is the equivalent of 3.8 % percent of Michigan’s workers. Will it help them sufficiently to better provide for themselves and their families? One advocacy group for the poor says that even the $9.25 minimum wage will not lift a family of three above the federal poverty level. Then again, business is concerned that even with the graduated level of the increase, some employers will have difficulty adjusting to paying more to employees, which may occasion layoffs.
And so, DC, that at least is how one state got it done.
If you need any help on getting it done — that is, implementing the new minimum wage law properly for your company — please feel free to call.