Seven years after conservative Michigan lawmakers scrapped a ballot measure that—if passed—would have increased the state’s minimum wage and gradually eliminated the lower tipped minimum wage, a Michigan Supreme Court decision is slated to go into effect next month to reinstate the ballot measure’s benefits for low-wage workers. However, conservative state lawmakers are considering new legislation to preserve the subminimum tipped wage, which would weaken pay increases for Michigan’s nearly 100,000 tipped workers.

Michigan lawmakers could once again interfere with voters’ desire to strengthen economic security for low-wage workers

Michigan’s minimum wage is scheduled to increase to $12.48 on February 21, 2025, before growing each year to $14.97 in 2028.1 The tipped minimum wage, which is currently set to 38% of the regular minimum wage, will also increase annually from $5.99 in February 2025 until eventually matching the regular minimum wage in 2030.

This series of increases is the latest legacy of a 2018 state ballot initiative that would have raised the state minimum wage to $12.00 an hour by 2022 and gradually eliminated the subminimum tipped wage. The measure was highly popular with voters, securing more than 280,000 signatures to be placed on the ballot. Before the full electorate could weigh in on the ballot measure, however, the state’s Republican-controlled legislature chose to “adopt and amend” the measure and remove it from the ballot by passing their own weaker minimum wage legislation. The enacted legislation extended the implementation of the increase by eight years to 2030 and preserved the lower tipped minimum wage, dramatically weakening the benefits to workers.

In 2024, the Michigan Supreme Court found the “adopt and amend” tactic used by Republican lawmakers was unconstitutional as it denied Michigan voters’ their right to the ballot initiative process. The court ordered the minimum wage to be increased more rapidly in the spirit of the original measure and that the value of the increases be adjusted to account for inflation since 2018. The court decision also reestablished the phase-out of the tipped minimum wage.

Through 2028, Michigan’s reinstated increases stand to lift wages for more than 560,000 workers, or approximately 13% of the state’s wage-earning workforce. Increasing the minimum wage would boost wages for workers by more than $1.3 billion, with the average affected full-time worker gaining more than $2,300 in annual wages.2 Almost 100,000 tipped workers in Michigan would benefit from the increases. Full-time tipped workers could earn significantly higher wages, earning $6,700 more a year through 2028.

These gains will be jeopardized if lawmakers once again make changes that weaken the minimum wage schedule. Conservative lawmakers are particularly focused on preserving the subminimum tipped wage, which is an enduring exception to the regular minimum wage in both federal and many state laws. The policy is rooted in the country’s history of slavery and continues to expose many tipped workers to greater levels of poverty and wage theft. In addition to this economic harm, preserving the tipped minimum wage would once again undermine the desire for change voters expressed in 2018.

If Michigan does follow through on eliminating its tipped minimum wage, it will be the first state to do so in recent years. However, seven states (AK, CA, MN, MT, NV, OR, and WA) have long treated tipped workers the same as all other workers, providing them the same minimum wage regardless of tips. In the past few years, voters and lawmakers have also chosen to eliminate the tipped minimum wage in Washington D.C., Chicago, and Flagstaff, AZ.

Business lobbying groups are pushing misleading narratives about the tipped minimum wage

Business and industry lobbying groups insist that eliminating the tipped minimum wage will cause significant harm to businesses where tipped workers are concentrated, particularly in restaurants. They also claim that eliminating the tipped minimum wage will end the practice of tipping entirely. Neither of these arguments holds up to scrutiny. The highest quality minimum wage research continues to show that increasing the minimum wage boosts workers’ wages with no meaningful impact on employment or business growth, including in the restaurant industry. The practice of tipping remains commonplace in states that do not have a subminimum tipped wage such as in Minnesota or Nevada. The difference is that in these states, workers are less likely to require their customers’ goodwill to secure a livable wage.

Michigan should eliminate the tipped minimum wage

Instead of undermining the economic security of tipped workers, Michigan policymakers should take steps to make the phase-out of the tipped minimum wage as smooth as possible for businesses, workers, and consumers. This includes issuing clear guidance on the use of “service fees” by restaurants and other establishments so that customers know if the fee is going to workers’ wages or not. Policymakers should also provide resources to proactively investigate minimum wage violations and other forms of wage theft. In 2022, Michigan’s Attorney General and Department of Labor recovered more than $2.6 million in wage violations, but this is likely only a small share of total infractions.

The 2018 ballot initiative reflected clear public support for Michigan to increase the economic security of low-wage workers, particularly tipped workers. Despite resistance from business lobbying groups and conservative lawmakers, Michigan should maintain the court-ordered path to eliminate the tipped minimum wage and the exploitation it perpetuates.

Notes

1. After 2028, Michigan’s minimum wage will be adjusted each year for inflation. In 2029, Michigan will likely join 19 other states in having a minimum wage of at least $15 an hour.

2. EPI Minimum Wage Simulation Model. See Technical Methodology.