DETROIT (WXYZ) — Michigan workers who receive tips could see a jump in their paychecks after a recent Court of Claims ruling called the state's minimum wage unconstitutional.
Currently, Michigan’s minimum wage is set at $9.87, while for tipped workers it’s $3.75.
The state of Michigan is currently appealing the Court of Claims ruling. But if the higher court upholds the ruling, the minimum wage will be raised up to $12 an hour across the board, including tips.
Terra Travis, 25, works as a server at Imperial in Ferndale. She says her current minimum wage is around $3 an hour, making tips essential for people like her.
“Sometimes I get cut early at work, so I walk out with $20, which I can’t do every time. So, I’m picking up other shifts and working more,” Travis said.
She also says it’s taken a toll on her health. Before the pandemic, Travis would make $300 in tips per night, but now on a good day, it's only $150.
“I have to tip out my bussers, I have to tip out the bartenders. I’m left with much lower than I thought I would be walking home with. So if I knew I had that minimum wage coming in the check the next week, I'd feel much better,” Travis said.
That’s why she feels raising the minimum wage for tipped workers will be a win for many. It’s something Yum Village owner Godwin Ihuntuge is in favor of.
“Tipped wage workers are rooted as slavery. It's part of the old notion, noblesse obliges. But now as we’ve grown and we have so many different aspects that have touched the industry, including the pandemic, I think it's important we even the playing field altogether,” Ihuntuge said.
In additional to inflation and supply chain issues, Ihuntuge says restaurant owners are still feeling the impacts of the coronavirus pandemic.
“Well to be honest with you, inflation and supply chain issues have been tearing apart this industry for the past three years. Since the pandemic came post-2020, only 40% of businesses of color that were restaurants permanently closed. In addition to that, across the board, we have seen an increase,” Ihuntuge said.
Godwin says he is already paying his servers up to $15.50 per hour along with a tipped pool wage and commission opportunities.
“If you want good talent you will have to pay them,” Ihuntuge said.
Financial guru Dewey Stefan says more pay means more spending power at stores and restaurants.
“They’ll have more money, and they’ll go spend that money either paying down their debt or into the economy,” Stefan said.
Since the pandemic impacted staffing issues forcing many restaurants to cut back on operations, Stefan believes raising the minimum wage will translate to more revenue.
“Because more tipped employees will come back to work,” Stefan said.
Ihuntuge has advice for business owners that could help them keep employees.
“If the business isn't giving you enough money, then pivot the business. That extra revenue can help you hire better people or keep the people that you have that are good, so that you guys can collectively work to grow that business," Ihuntuge said.
On the flip side, Stefan says if the minimum wage is increased, businesses could see their existing workforce demand an even higher hourly rate, putting a financial strain on employers.
