The Senate’s changes to the minimum wage initiative not only keeps the tip credit system around, but unchains any future increases after 2030 from inflationary increases, meaning the minimum wage would stay frozen at $12 an hour after 2030.
The new version of SB 1171 approved by the full Senate Wednesday changed the minimum wage proposal to allow for a $12 minimum wage and a $4 minimum wage for tipped workers by 2030, keeping the status quo that calls for tipped workers to be paid the difference between the regular minimum wage and the tipped wage if they don’t make it up in tips.
But a substitute version of SB 1171 that debuted Wednesday morning in committee also unhooks future minimum wage increases from the consumer price index (CPI).
The ballot proposal would’ve hooked increases to the $12 minimum wage after 2022 to the CPI. And, starting in January under the law in place before the ballot proposal passed this fall, annual adjustments to the state’s minimum wage would’ve already been hooked to increases to the CPI.
Assuming two percent growth each year, the state’s current $9.25 per hour wage would’ve eventually grown to roughly $11.73 by 2030, according to MIRS’ estimates.
Asked about why the bill ditches the CPI increases, bill sponsor Sen. Dave Hildenbrand (R-Lowell), said in committee Wednesday he had been “uncomfortable” with tying 2014 legislation to the CPI, which is when the Legislature approved a minimum wage increase after a similar ballot proposal campaign to raise the wage.
But the idea was by tying future increases to the minimum wage to the CPI, the Legislature wouldn’t need to revisit the issue, he said.
However, the issue was revisited this year, with the Michigan One Fair Wage campaign sponsoring the $12-an-hour campaign.
“We have a full-time Legislature, and since we’re going to be reviewing this issue, sounds like, every so many years, why have an automatic increase in it?” Hildenbrand asked.
Pete Vargas, campaign manager for Michigan One Fair Wage, said there shouldn’t be a “time limit” on when Michigan citizens can exercise their constitutional rights to initiate legislation.
Senate Minority Leader Jim Ananich (D-Flint), who asked the question about the CPI during committee, said he disagreed with Hildenbrand’s approach, adding that it’s important that as costs go up, people’s incomes go up as well.
Peter Ruark, senior policy analyst with the Michigan League for Public Policy (MLPP), asked about the CPI issue. His hope is that the “next Legislature will do a better job and fix this mess that the Senate has created today.”
Ananich also pointed out SB 1171 would actually decrease the percentage of the regular minimum wage that tipped workers are paid from 38 percent to 33 percent under the new bill.
The original minimum wage proposal had eliminated what’s known as the tip credit and instead would eventually bring tipped workers – who are now paid a minimum of $3.52 per hour — up to the same level as all other minimum wage workers. That goes away in the Senate-passed bill.
The Senate bill would also phase in the minimum wage hike slower than the ballot proposal, which had provided for $12 an hour by 2022. The MLPP called the Senate’s annual 23-cent hike until 2030 a “minimal and sluggish increase” that would “fail to keep up with the ever-rising cost of inflation and the cost of living.”
The full Senate Wednesday approved SB 1171 on a 26-12 vote, as well as SB 1175, which includes a number of changes to the paid sick time proposal. Sen. Tory Rocca (R-Sterling Heights) joined the Democrats in opposing the bills.
Sen. Curtis Hertel Jr. (D-East Lansing) spoke out against both bills on the floor prior to passage, but otherwise there was no other debate. Both bills will now head to the House.
Hertel said he predicted that when the Legislature adopted both proposals that it was “nothing more than a political game” and that voters wouldn’t be told about plans to change those proposals until after the election.
“Lo and behold, that is exactly what has happened,” Hertel said.
On the paid sick leave changes in SB 1175, sponsored by Sen. Mike Shirkey (R-Clarklake), the substitute changes the maximum amount of paid sick leave a person can earn to 36 hours a year, as opposed to the 72 hours in the original proposal.
Also, the substitute would allow workers to earn 1 hour of paid sick leave time for every 40 hours worked, instead of the original 30 hours worked.
The substitute also exempts businesses with 50 or fewer employees from the law, and only allows employees eligible to use sick leave after working for one year and 1,250 hours for the same employer over the past 12 months, among other changes.
The MLPP said the 50-or-fewer employees provision would end up “locking out many of our state’s lowest paid workers from paid sick leave.”
Both ballot proposal-altering bills advanced from Senate Majority Leader Arlan Meekhof’s (R-West Olive) Government Operations Committee Wednesday morning on party-line votes, with Ananich and Sen. Morris Hood III (D-Detroit) in opposition.
Individuals representing both proposals spoke out in committee against the bills that changed them, advocating for the proposals in their original form.
Some protested against the Legislature moving to change the initiatives that were ultimately approved by the Legislature after organizers had garnered hundreds of thousands of signatures, arguing such a move subverted the will of the people.
“Gutting this proposal after adopting it is a cynical ploy to undermine the will of the 400,000 Michiganders who signed the One Fair Wage petition to support increasing the minimum wage,” said Dr. Alicia Renee Farris, the steering committee chair for Michigan One Fair Wage, in a statement.
And the issue of whether such an alteration of an approved iniative by the Legislature during the same session is constitutional was raised, as well.
“Adopting the One Fair Wage proposal only to later gut it in lame duck is blatantly unconstitutional and will lead to costly time-consuming court challenges,” Vargas said in a statement. “Regardless of one’s feelings on raising the minimum wage, we expect all our elected leaders to uphold the constitution and preserve the rule of law at all times.”
Meekhof said the state constitution doesn’t prohibit the Legislature from amending an adopted initiative in the same session. And in reference to an opinion from former Attorney General Frank Kelley saying the Legislature cannot do such a thing, which critics have pointed to as grounds for opposing the legislation, Meekhof said, “it’s just his opinion.”
Asked if the issue would eventually end up in court, Meekhof said, “That’s not up to me.”
A number of business groups spoke out in favor of the bills, including the Small Business Association of Michigan (SBAM), National Federation of Independent Business (NFIB), and the Michigan Chamber of Commerce on the paid sick leave bill, and the Michigan Restaurant and Lodging Association (MRLA) on the minimum wage bill.
NFIB State Director Charlie Owens thanked the Senate for making “major changes” to “the extreme and poorly drafted sick leave proposal forced on employers by outside special interest groups.”
Business groups portrayed the sick leave proposal as more stringent than other states’ sick leave policies and a threat to Michigan’s ability to compete.
“Without changes, Michigan’s new mandatory paid sick leave law would make Michigan an outlier in the Midwest and jeopardize our state’s competitiveness,” said Jim Holcomb, executive vice president and general counsel for the Chamber, in a statement.
NFIB is hoping the House will take up the paid sick leave bill this week.