LANSING – Michigan’s minimum wage workers will see the first of several wage increases starting September 1 following the enactment Tuesday of a bipartisan deal to bring the state’s minimum wage to $9.25 per hour by 2018 and, for the first time, tie the rate to inflation going forward.
Not long after 8 p.m., Governor Rick Snyder signed SB 934 (PA 138, immediate effect) into law, hours after the House spent the day working the issue to obtain a 76-34 final passage vote. The Senate quickly concurred in the H-5 substitute negotiators assembled on a 24-12 vote.
Democrats, including their gubernatorial candidate, Mark Schauer, celebrated the increase in the minimum wage, a bread-and-butter issue for the party, and especially the inflationary aspect, something they have sought unsuccessfully for years.
“This is a big win for Michigan’s hard-working families,” House Minority Leader Tim Greimel (D-Auburn Hills) told reporters after the vote. “Getting the minimum wage up to $9.25, with indexing to inflation after that, is a huge win for Michigan workers.”
Schauer, who had offered a similar proposal last year, said while he had led on the issue, Mr. Snyder did not. In November, Snyder had called Schauer’s proposal for a $9.25 per hour minimum wage “a significant hike” and one “that could be a challenge,” noting Michigan already at $7.40 an hour was above the national minimum wage of $7.25.
Since then, Snyder had steadfastly declined to take a position on the issue until Tuesday.
“Last November, I proposed raising the minimum wage to $9.25 because nobody who works full time should be living in poverty,” Schauer said in a statement. “Today I’m pleased to see the Michigan House approve this common-sense legislation. Raising the minimum wage to $9.25 and tying it to inflation will give a meaningful raise to more than 1 million Michigan workers, and help strengthen our economy.”
Asked if he was concerned at all that the final product largely resembles a proposal by his gubernatorial opponent, Snyder said, “I view it as, I don’t run on what people say. I run on my record and I’m just proud to be getting this done today.”
Pressed further on the matter, Snyder acknowledged that Schauer “appears” the Democratic candidate for governor, and, “That’s all I say about Mark Schauer,” Snyder said.
“This was good, thoughtful work. If you look at the range of increases, particularly compared to some of the other choices out there, I think this is important,” Snyder said. “I think this was a good compromise. This was good legislation that’s in line with basically what cost of living would’ve been over the last few years and what it will probably be in the future.”
Twenty-seven Republicans joined 48 Democrats, as well as Rep. John Olumba (I-Detroit), voted to pass the bill. Two Democrats and 32 Republicans voted no. In the Senate, 14 Republicans and 10 Democrats combined to vote yes while two Democrats and 10 Republicans voted no.
For Republicans, the legislation was a bitter pill to swallow, but many of them voted for it solely to undercut the expected ballot proposal that would gradually raise the minimum wage to $10.10 an hour by 2017, tie the rate to inflation afterward, and most controversially bring tipped workers up to the regular minimum wage.
Currently, tipped workers make $2.65 per hour. SB 934 would set their wage at 38 percent of the regular minimum wage, and it was the prospect of the ballot proposal ending the differential that motivated the Republican majority to act on a minimum wage hike, but with a twist.
The bill would repeal the existing minimum wage law and replace it with a new statute. The ballot proposal was written to amend the now-repealed statute, leaving it potentially moot because there is no statute to amend. If the ballot proposal passes, that issue will probably be fought in court.
And backers of the proposal from the group Raise Michigan said they planned to press ahead with submitting their petition signatures Wednesday, the deadline for submitting voter-initiated acts for the November ballot.
“We are continuing,” said Danielle Atkinson of Raise Michigan. “We feel we have an obligation to the 300,000 people that signed a petition to turn it in, to follow up with the democratic process, even though it’s trying to be undermined every inch of the way.”
Rendering moot the ballot drive was the difficult aspect for Democrats, Greimel said, but ultimately the size of the wage increase topped those concerns. He said those who collected signatures should realize the bill never would have passed without their forcing the issue.
Under the bill, the minimum wage would rise to $8.15 per hour on September 1, $8.50 on January 1, 2016, $8.90 on January 1, 2017, and $9.25 on January 1, 2018.
From that point forward, the wage would adjust annually based on a five-year rolling average of the U.S. Bureau of Labor Statistics Consumer Price Index for the Midwest. Annual increases would take effect April 1 in each year after 2018 and could not exceed 3.5 percent.
No increase would occur if the state’s unemployment rate for the preceding year was 8.5 percent or higher.
Those last two factors are a bit stricter than the initial Senate-passed version, which set a cap on inflationary increases at 4 percent and barred annual increases when the state’s unemployment rate hit 10 percent or more.
The emergence of a deal among legislative leaders in the afternoon was a complete turnaround from the bill reported from the House Government Operations Committee early in the morning. That bill called for increasing the minimum wage gradually to $8.50 per hour with no adjustment in future years for inflation.
Once there was an agreement among the Legislative Quadrant, the task moved toward convincing enough Republicans to vote yes. In a sweltering Capitol still without air conditioning as renovations continue, Republican leaders and lobbyists began what many described as a slog to build the votes.
House Speaker Jase Bolger (R-Marshall) was heavily involved in the negotiations and putting together the votes, but left the chamber after the vote without commenting and did not attend Snyder’s news conference. Bolger spokesperson Ari Adler, asked if Bolger was available after session ended, said he was not and referred inquiries to Rep. Jeff Farrington (R-Sterling Heights).
Farrington said most Republicans think the market should set wages, not the government, but that was not one of the possible options, especially given the strong potential for voters to pass the ballot proposal. SB 934 was the “lesser of two evils,” he said.
“We want to make sure this doesn’t destroy the economy,” he said. “I’m a pragmatic person. I think many of my colleagues were. And we went forward with the best solution that we could under the choices given in front of us.”
Rep. Tom McMillin (R-Rochester Hills) was one of the Republicans who voted no, calling it a return to the policies of the prior decade that demonized businesses.
“This legislation treats businesses like they’re the bad guys again,” he said, warning it would lead to higher unemployment and prices.
But Rep. Rudy Hobbs (D-Southfield) said foes of increasing the minimum wage always warn of higher unemployment and those fears never prove true.
“If now is not the time to raise the minimum wage, then when?” he said. “Now is the time to give hard working individuals and their families a raise.”
Senate Majority Leader Randy Richardville (R-Monroe), at the governor’s press conference, reiterated that he had concerns about the language of the ballot proposal and its “inflexibility.” But he said he was pleased with the final outcome of his bill.
“We compromised and fought a little bit. Not everybody is gleeful and not everybody is upset. I think it’s one of those cases where everybody gave a little and got a little,” Richardville said. “So responsibly we have moved the minimum wage up (and) now it’s tied to the index, so for a long time we can take this debate off the table. I think it’s good legislation and at the same time a real good example of how people that don’t always agree can work together to get something done.”
Senate Minority Leader Gretchen Whitmer (D-East Lansing) characterized the final passage of the bill to the governor as a “quick but ferocious debate” but agreed with Richardville that the bill represents a compromise for all parties.
“I remain concerned about the people that worked so hard to gather signatures to bring this issue on the ballot, but I also want to thank them, because but for the work that they did, we would not be sitting here today with a product that actually guarantees an increase in the minimum wage,” Whitmer said, adding that she is most proud of having an inflationary increase in the bill.
The Michigan Restaurant Association called the bill a responsible approach.
“The MRA has made it clear from the beginning that the total elimination of the tipped minimum wage as proposed in the ballot initiative was gross negligence and would result in the closure of countless full-service restaurants – especially independent ‘Mom and Pop’ places least capable of absorbing a nearly quadrupling of their labor costs,” the group said in a statement. “The compromise legislation sustains a 38 percent ratio that will require adjustments by the full-service sector of the industry, but should prevent mass closure of restaurants.”
But the Michigan League for Public Policy said the measure does not go far enough.
“The legislation would freeze inflationary increases in times of high unemployment and it falls far short on the tipped wage,” the group’s president, Gilda Jacobs, said in a statement. “With enough signatures collected to put this on the fall ballot, voters deserve a chance to have their say on an increase to $10.10 an hour, with a very gradual increase in the tipped wage. The tipped wage increase is critical to working moms in the food industry. Employees who work hard in tough jobs should be able to meet their basic needs, and a raise to $10.10 an hour will go a long way to accomplish that.”
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