(The Center Square) – Some Michigan businesses are scrambling after a claims tribunal decision says the minimum wage should drop from $9.87 to $12 after the court ruled unconstitutional the 2018 GOP circumvention of two voter-initiated ballot initiatives.
One restaurant group estimates that this change would increase labor cost inflation by 156%.
In 2018, the GOP-dominated Michigan Legislature passed two ballot initiatives: one to raise the minimum wage to $12 by 2022 tied to inflation and eliminate a low wage, and another to compel employers to provide paid sick leave. But the legislature has weakened initiatives that former Republican Gov. Rick Snyder signed into law.
Michigan’s current minimum wage for tip workers is $3.75.
Claims Court Judge Douglas Shapiro “reversed” the amended GOP initiative and said the original initiatives “remain in effect.”
“The new laws therefore substantially altered the original laws proposed by voters,” Shapiro wrote. “The process effectively thwarted people’s intent and denied them the opportunity to vote on whether they preferred the voter-initiated proposal or the changes suggested by the Legislative Assembly.”
Wendy Block, vice president of business advocacy and member engagement for the Michigan Chamber of Commerce, said the decision could have a “chilling effect” on Michigan employers and employees.
“The talent shortage means employers are already paying historic wages and benefits — while dealing with rising inflation and supply chain chaos — just to keep doors open,” Block said in a statement. communicated. “Employees should also be concerned about the financial pressures this decision will place on businesses and the impact it could have on employee hours and benefits. We believe that time and energy should be focused on ways to help job providers fully recover from the impacts of COVID and workers overcome barriers to employment, such as guaranteed employment services. affordable child care, housing and transportation. »
Block said the House will review the decision and map out his options.
Michigan Attorney General Dana Nessel welcomed the decision.
“This ordinance is a victory for the people of Michigan whose efforts to bring an issue before their elected representatives were wrongfully circumvented by the Legislature in 2018,” Nessel said in a statement. “The judicial process undertaken is intended to be a tool for the people. As Justice Shapiro noted in his opinion, the constitution “gives the legislature three options for dealing with a proposed law through the initiative process – enact the law, reject the law, or propose an alternative. Article 2, § 9 does not allow the legislative body to adopt a bill and, during the same legislative session, to modify it substantially or to repeal it.’
Michigan Restaurant & Lodging Association President and CEO Justin Winslow said the decision would increase labor cost inflation for restaurateurs by 156%, causing “significant” layoffs and job losses. instant price increases.
“If the 2018 proposals are allowed to proceed as originally designed, restaurant owners would immediately experience labor cost inflation of 156% at a time when their recovery is already precarious and where the average wage for tip employees in Michigan is currently $24 an hour,” Winslow said. said in a statement. “The inevitable result would be instant menu price increases and significant layoffs during peak travel season. And those operators still in debt from over 400 days of dining room closures and occupancy restrictions that have barely survived the past two years would be forced to close their doors permanently.”
The decision follows the rise in inflation of 9.1% year over year, the largest increase in 41 years.