Senate passes $9.20 minimum wage tied to inflation
In a surprising turn of events, the Senate quickly passed legislation yesterday that repeals Michigan’s existing minimum wage law, replaces it with a gradual increase to $9.20 an hour by 2017 and indexes the rate to the lower of inflation or 4%. The bill’s intent is to kill an expected ballot proposal that would raise Michigan’s minimum wage to $10.10 an hour by 2017 https://www.retailers.com/mra-news/gan_february-28-2014, index the rate to inflation and eliminate the tipped wage for restaurant employees. Opponents of the ballot proposal believe it goes too far by increasing the rate too high too quickly and could devastate the restaurant industry. The current minimum wage is $7.40 and the tipped wage is $2.65.
SB 934 makes a number of changes from the existing law, including adding a provision that allows an employer to pay 85% of the minimum wage to an employee under age 18. Tipped employees would see an increase in their base hourly wage from $2.65 to $3.50 by 2017. The tipped wage is also tied to inflation, and employers would remain responsible for making up the difference if employees did not meet the standard hourly minimum wage through tips and their base pay. There is no change to the $4.25 training hourly wage allowed during the first 90 days of employment.
Minimum Wage Rate Changes as proposed under SB 934:
September 1, 2014 – $8.15 / $3.10
January 1, 2015 – $8.50 / $3.23
January 1, 2016 – $8.85 / $3. 36
January 1, 2017 – $9.20 / $3.50
Every October, the state’s wage and hours division would calculate an adjusted rate based on the percentage increase, if any, over the previous 12-month period in the Detroit area Consumer Price Index. The percentage increase could not exceed 4%. Revised rates must be posted on the state’s website by November 1 and the new rate would take effect January 1 of the following year.
The bill passed by the Senate received bipartisan support and gained an unlikely ally in Democratic gubernatorial candidate Mark Schauer. It sprang from an original bill introduced last week by Senate Majority Leader Randy Richardville (R-Monroe) that would have raised the rate only to $8.15 and not indexed it. However, SB 934 could have a tougher road going forward.
House Speaker Jase Bolger (R-Marshall) expressed concerns over the potential impact of the legislation on employment and job providers. The House will need to decide whether to refer the bill to a committee or hold the bill on the floor for discussion and a vote. Gov. Snyder is still reviewing the bill and remains committed to ensuring Michigan is a good environment for job growth. Supporters of the Senate’s minimum wage bill believe this solution could reduce the number of people receiving state assistance and, by tying it to inflation, could mean the legislature would never need to address the rates again.
