This week, organizers of the Raise the Wage MI proposal to increase the state’s minimum wage to $15 by 2027 and eliminate the tip credit failed to clear the signature requirement to move the ballot measure closer to voters in November.
Instead, One Fair Wage, the nonprofit associated with the controversial Restaurant Opportunities Center, announced it would submit signatures in favor of placing the measure on the ballot this month — to instead place the measure on the ballot in November 2024.
The group cited “an abundance of caution” to make sure enough signatures are deemed valid by the Michigan Board of Elections. If the signature requirement is met, the state legislature will decide whether or not to enact the measure outright, or leave it to voters to decide in 2024.
But economic research still shows that regardless of when the proposal reaches the ballot, enacting a hike from the state’s current wage of $9.87 per hour up to $15 by 2025 would cost Michigan’s restaurant employees thousands of jobs and millions in earnings.
Consider recent analysis by economists William Even and David Macpherson of Miami and Trinity Universities. They estimated a $15 per hour wage for tipped employees would slash 21,666 jobs in Michigan’s full-service restaurant industry alone, and reduce total annual earnings of full-service restaurant employees by roughly $48 million.
This falls in line with another recent study by economists David Neumark and Maysen Yen from the University of California – Irvine, the authors find three decades of state data indicate every 1% increase in the tipped minimum wage results in a nearly proportional decrease in employment for tipped employees in full-service restaurants.
Previously, Employment Policies Institute analysis showed these job-killing impacts would compound on top of the negative effects of Michigan’s existing wage hikes. Even prior to the pandemic, full-service restaurant employment has been on the decline. Earlier in the decade, employment in the industry grew. But beginning in 2017, full-service restaurant employment growth slowed to less than 0.1%, and dipped negative (signifying net job loss in the industry) after minimum wage increases were scheduled by the legislature in 2018 and 2019.
Michigan lawmakers have seen similar proposals before, and opted instead to preserve the tip credit when presented with its severe negative impacts. Voters and lawmakers should beware of this measure resurfacing in 2024.