Restauranteur Chris Andrus has no problem raising the minimum wage. His business, The Mitten Brewing Company, already did six months ago.
The brewery was one of four Grand Rapids restaurants that pledged to raise their minimum wages to $15. What they didn’t do is eliminate the tipped wage. Instead, they boosted pay for back-of-the-house employees and installed a safety net for servers, promising to make up the difference if gratuities didn’t bring wages to $15 an hour.
Since June, Andrus said they haven’t had to augment a server’s wage at the end of a shift.
A 2018 ballot proposal would increase Michigan’s minimum wage to $13.03 and $11.73 for tipped employees in 2023. By 2024, the tipped wage is to equal the minimum.
The restaurant industry has been debating the wage increase since the measure became entangled in a legal battle over the summer. Advocates say it puts the state on a long overdue path to a living wage. Opponents say it’s not the right solution or the right time.
Increasing tipped wages would be giving a raise to the wrong section of the restaurant, Andrus said. Servers often make more on tips than their counter parts in the kitchen on an hourly wage.
“You’re spraying water on the house that isn’t on fire,” Andrus said. “And letting the one that is burn.”
As it stands now the wage increase could go into effect February 2023. Ongoing litigation could change this, though. A Court of Appeals decision is expected by Feb. 1.
Appellate judges are considering whether the 2018 Legislature was within its rights to “adopt-and-amend” the proposal. The initiative secured sufficient signatures and pushed lawmakers to either pass the legislation or allow a statewide vote in the next general election. The legislature adopted the bills but two months later, after the election, it passed additional bills weakening the original proposal, extending the implementation timeline and reducing sick leave.
Additionally, pay for tipped workers stayed lower instead of equaling the minimum wage. The bills also included caveats around unemployment levels and did not index for inflation.
In July 2022, a Court of Claims judge ruled in favor of the ballot initiative. Judge Douglas Shapiro ruled the Legislature could not “adopt-and-amend” without an election in between.
Attorneys representing the Legislature appealed. They argue the state constitution only requires the legislature wait until the next session to amend a law subjected to referendum, not a ballot initiative. Therefore, because the legislature enacted the law first, they can amend it at any point they see fit.
During the Court of Appeals hearing attorneys hinted that regardless of the decision, one side would likely take it to the Michigan’s Supreme Court.
Related: Michigan’s minimum wage will hit $10 in the new year. Court decision could raise it higher
Meanwhile, restaurant owners and servers against the change say the practicality of this decision has been lost.
The original ballot initiative, passed three years ago, installed a progression of yearly increases but because it was tied up, it’s now proposed to jump to 2023 rates. This eliminated the on-ramp for restaurants to prepare for change, said Kyle VanStrien, co-owner of Long Road Distillers.
Jumping from a tipped hourly rate of $3.84 to $11.73 is too swift and steep of an increase, VanStrien said.
Long Road Distillers was among the Grand Rapids restaurants that pledged a $15 guarantee. That decision, in addition to a tip pool, has kept his servers afloat at a Grand Haven location with more seasonal highs and lows.
The Michigan Restaurant & Lodging Association surveyed 307 restaurant and hotel operators representing nearly 2,000 locations about how they would balance increased wage costs.
The majority, 91%, said prices would increase in response and 58% said the increase would result in staff layoffs.
Menu prices did increase in the last six months at Long Road Distillers, but VanStrien attributes that more so to the inflationary cost of food and materials than to the $15 guaranteed minimum.
To increase labor costs after the industry fought wage wars amid a labor shortage would just add to mounting costs, opponents say.
Advocates of increasing the minimum and tipped wages say that if labor costs are already rising due to demand then it’s the right time to set higher wages in stone for the future.
Grand Rapids bakery Field & Fire is in favor of an increased minimum wage and doing away with the tipped minimum.
Co-owner Julie Kibler doesn’t reject the projection restaurants will need to up their prices and that ultimately customers will bear the burden. Her take is it’s time for a culture shift.
“I don’t want to pretend like this isn’t going to be a financial shock to a lot of restaurants and that it’s not going to cut into people’s bottom line because it definitely will,” she said. “Consumers are going to have to get used to paying a little bit higher prices at the restaurant and maybe leaving a little bit less tip. But in the long run, I think it’s going to benefit everybody.”
As for tips, bakery manager Jen Han said the owner should be responsible for paying employees, not customers.
“Tips should be meant as a bonus not the basis of a worker’s wage,” she said.
Bartender Gabbie Huhn, 21, disagrees. Her tips are paving her way to be a physician’s assistant. Huhn works at The Riv in East Lansing at night and does her clinical hours during the day. She estimates she makes $30 to $40 an hour.
If the tipped minimum disappears then Huhn’s career plan will completely change, she said.
“For me, it’s probably going to look like not going to grad school next year because I’ll need to save up more money and it’ll take me much longer because I’ll be working at an hourly place,” she said.
The impending change makes Huhn feel powerless, she said. Without the boost of tips, she said she’ll likely leave the restaurant industry and find an hourly job elsewhere, even if it means sacrificing schedule flexibility.
“When you’re in the industry, the harder you work and the faster you are and the more you connect with your customers, the more money you can make,” she said. “You really have that control over it. If any part of that changes and the tipped wage system goes away, I’m not my own little entrepreneur anymore.”
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