The Michigan Supreme Court ruled on Wednesday that legislators had unconstitutionally subverted a voter-sponsored proposal to raise the state’s minimum wage.
As a result of the 4-to-3 ruling, labor groups expect Michigan’s hourly minimum wage of $10.33 to increase by at least $2 in February, once the state treasurer calculates inflation adjustments. There will be subsequent cost-of-living increases through 2029.
In addition, tipped workers, who currently can be paid as little as $3.84 per hour, will be subject to the same minimum as all other workers by 2029, putting Michigan on a path to be the eighth state to establish a standard wage floor for all workers.
Labor activists and union groups celebrated the Michigan court’s decision.
“We have finally prevailed over the corporate interests who tried everything they could to prevent all workers, including restaurant workers, from being paid a full, fair wage with tips on top,” Saru Jayaraman, the president of One Fair Wage, a national nonprofit organizing group, said in a statement.
Her group is directly cited in the case because of its involvement in gathering the necessary signatures from Michiganders in 2018 to invoke the ballot initiative and send the proposal to the Legislature, which Republicans led at the time.
To prevent the wage increase proposal from reaching the 2018 general election ballot, a large cohort of restaurateurs — led by the Michigan Restaurant and Lodging Association — pushed the Legislature to simply adopt the proposal sponsored by One Fair Wage and other groups, which the Legislature did. Legislators then rolled back the law’s provisions after the election.
“The Legislature may not adopt an initiative petition and then later amend it in the same legislative session; such an act violates the people’s right to propose and enact laws,” the court said in its opinion.
The federal minimum hourly wage has been $7.25 since 2009; for tipped workers, it has been $2.13 since 1991. Those levels remain the floor in 15 states. But a push in recent years to raise minimum wages has notched victories in several states. And laws phasing out subminimum wages for tipped workers have been enacted in cities including Chicago and Washington.
The Michigan ruling is likely to upset a range of restaurant and bar owners, who had been bracing as the court’s decision loomed. Having wrestled with elevated inflation for years, many expressed concern about the impact that higher labor costs might have on the profitability — or even survival — of their businesses.
Justin Winslow, the president and chief executive of the Michigan Restaurant and Lodging Association, recently predicted “dramatic fallout” if the court ruled in the plaintiffs’ favor, estimating that “40,000 to 60,000 restaurant jobs would be lost in very short order” and that “one in six full-service restaurants will just shut down.”
Mr. Winslow did not respond to a request for comment on Wednesday.
Justin Wolfers, an economist and professor of public policy at the University of Michigan, praised the court’s decision to maintain “a phase-in period, so businesses have a long time to adapt.” He added that “perhaps businesses have a bit of extra fat that they could share,” based on longtime trends showing a decline in the share of business revenue going to worker pay relative to profits.
In response to the ruling, James Hawk, a bartender on the west side of Detroit who was a plaintiff in the case, said he wasn’t worried about a reduction in tips from customers, or a loss of employment opportunities — two concerns often listed by opponents of higher minimum wages in the industry.
“If the sky doesn’t fall,” he said, “that means we’re moving in the right direction.”