FARMINGTON, Mich. (WXYZ) — The Michigan minimum wage is expected to increase for tipped workers starting Feb. 21.
Some are celebrating the bump while others including some restaurant owners are worried they won't be able to sustain the hike. That includes John Cowley & Sons Irish Pub in Farmington, which recently implemented a 20% service charge to prepare for the change.
Last summer, the Michigan Supreme Court reinstated a 2018 law that state Republicans at the time blocked to increase the tipped wage and amount of sick time leave for workers. With the Supreme Court's decision, the increase of $5.99 per hour for tipped workers is expected to go into effect next month.
“This business model cannot support what they’re trying to do," John Cowley & Sons owner Greg Cowley said. “It will put a lot of restaurants down.”
Previous coverage: New year brings new minimum wage to Michigan, but some don't want the raise
To keep the restaurant open, Cowley says he had to make the decision of letting go staff or implementing some sort of service charge. He says laying off staff was not an option for him.
“I’ve got about 16 servers... I can’t run the building without 16 servers. I need that kind of labor," he said. “Pretty easy decision for me to basically say I'm leaving my menu prices where they are at and the margins that I expected, and I'm just taking the money out of the right pocket and putting it in the left where basically the surcharge is flipped over and is now in their salary.”
Republican Rep. Bill Schuette is chair of the newly formed select committee Protecting Michigan Employees and Small Businesses. He says he is working around the clock to make sure that raise does not happen.
"Unless the Legislature acts, we're going to see an elimination of the tip credit, which is going to not only put additional costs on your family when you're going out to eat but also will rob restaurant workers of their hard-earned tipped wages, which is a key part of their income," Schuette said. "Our restaurant workers, the restaurant industry, they're facing a freight train that is bearing down on them come Feb. 21. And that's because of a ruling the Supreme Court has made."
However, advocacy groups like One Fair Wage disagree, saying that workers will now have a higher wage as well as their tips.
"The tips aren't going away on Feb. 22. This is about raising the base wage with tips on top, and every restaurant worker across Michigan will earn more money come Feb. 21," former state legislator and One Fair Wage senior adviser Dave Woodward said. "I think what the Republican-controlled statehouse is doing is absolutely shameful. They're doing the exact same thing that their predecessors did six years ago: scheming with the big corporate lobbies to deny workers in Michigan a wage increase and the ability to earn paid sick time."
Warren resident Hannah Gregory says despite the possible surcharges statewide, she’ll still tip.
"I have family that have worked in service industries and I just know how much their tips mean to them and to their families, so I just think you have to take care of your neighbors," she said.
Scheutte and other House Republicans have two bills that would reinstate the tip credit and address the sick time policy, hoping to get those on the House floor by Thursday.
