Michigan’s Minimum Wage Increases, Changes Could Still Be Coming

Michigan’s minimum wage increased to $10.33 on Jan. 1, 2024, in accordance with the Improved Workforce Opportunity Wage Act of 2018. Under the law as it currently stands, the minimum wage is set to increase to $12.05 an hour by 2030, depending on the state’s unemployment rate. Furthermore, the tipped wage rate will increase to $3.93 an hour. Depending on a Michigan State Supreme Court ruling though, the hourly rate improvements could shift.

In 2018 a petition to increase Michigan’s minimum wage to $12 by 2022, while also accounting for inflation, received 280,000 signatures from voters. The Republican-led Michigan Legislature at the time adopted the language of the petition but then amended the language. These amendments slowed plans to increase Michigan’s minimum wage and also eliminated the plan to eventually eliminate the lower tipped wage in restaurants, instead maintaining the wage rate at 38 percent of the full minimum wage. This issue has been in Michigan Courts, with the focus specifically being on the legality of the legislature adopting petition language and then amending it. The Michigan Court of Appeals issued an opinion ruling that found the Michigan Legislature did not act unconstitutionally when it adopted petition language and amended in the same session in 2018. This opinion has been appealed and the issue is now being taken up by the Michigan Supreme Court.

As is shown in the chart below, Michigan’s minimum wage has been steadily increasing since 2015 when it was $8.15 an hour. Prior to that it plateaued at $7.40 an hour between 2009 to 2013. Michigan’s minimum wage also remained stagnant between 1998 and 2006, 1981 to  1997, 1976 to 1978, 1972 to 1975 and 1968 to 1971, according to the Federal Reserve Bank of St. Louis.

In theory, increasing the minimum wage will also increase the earnings of most low-wage workers. With a minimum wage of $10.33 an hour in 2024, a full-time worker earning that wage could make about $21,400 a year, assuming they worked 40 hours a week for a full year. This would be an increase, if making the same assumptions, from an annual salary of about $20,500 a year with an hourly rate of $10.10 (2023 minimum wage).  According to the US Census Bureau, less than 10 percent of households in each county in Southeast Michigan made between $15,000 and $24,999 a year in 2022. So, even with a minimum wage increase, many of those households earning below $25,000 a year will remain under that threshold. This is a threshold that is below the poverty level for a family of four.

According to Healthcare.gov, an individual earning $13,590 or below in 2022 was considered to be living at or below the poverty level, this number increased to $14,580 in 2023. For a family of four the poverty level was $27,750 in 2022 and $30,000 in 2023.

In 2022, the year for which the most recent data is available, Wayne County had the highest percentage of households living at or below the poverty level in the seven-county region at 20.2 percent. Monroe, St. Clair and Washtenaw counties were the only other ones in the region with more than 10 percent of households living at or below the poverty level. Wayne County also had the highest percentage of households earning between $15,000 and $24,999 a year at 9.3 percent. Furthermore, Wayne County had the lowest median household income in the region at $55,867. Livingston County had the lowest percentage of households living at or below the poverty level in 2022 at 4.9 percent and had the highest median income at $100,139.

So, while the minimum wage increased in Michigan, and helping those with among the lowest earnings in the state, the gap between the minimum wage and a living wage still exists. A living wage is the hourly rate that an individual in a household must earn to support his or herself and their family. According to the Massachusetts Institute of Technology, $16.27 an hour is the amount an individual needs to earn to make a living wage.

An increased minimum wage not only increases the earnings of some of Michigan’s lowest earning workers, but it also has been shown to have positive impacts on physical and mental health, well-being and educational outcomes.

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