Michigan restaurants, hotels worried about minimum wage hike

The Michigan Restaurant & Lodging Association (MRLA) today released the results of a recent survey of hospitality operators to measure the likely impact of the “Adopt and Amend” decision, which will take effect on February 19, 2023 disastrous impact on Michigan’s restaurant industry.

In July, the Michigan Court of Claims ruled unconstitutional a 2018 measure by the Michigan legislature when it accepted two citizen-initiated petitions and later amended them in the same legislature. The case is currently before the Michigan Court of Appeals, with a hearing scheduled for December 13.

If the Court of Claims ruling is not overturned, Michigan’s minimum wage will rise to about $13 an hour in February, and the tipped minimum wage will rise more than 200 percent overnight to about $11.75 . The tip credit, or the difference between the full minimum wage and the tipped minimum wage, would be eliminated, making Michigan one of only a handful of states to go tippless. The impact of these rapid and drastic wage increases on an industry still recovering from the pandemic will be disastrous for Michigan’s second-largest private employer.

“The Michigan Court of Claims’ adopt-and-amend ruling earlier this year surprised many and had the unfortunate effect of putting Michigan’s still-recovering restaurant industry in the midst of a preventable crisis,” said MRLA President and CEO Justin Winslow . “With the release of our operator survey, it is empirically clear that without remedy in court or by the legislature in February, when the ruling goes into effect, the Michigan restaurant industry is staring at pandemic-level closures and job losses. As we face the upcoming lame duck legislature session, we are heartened by the governor’s public acknowledgment that a sensible legislative solution is the best option, and are working with lawmakers to ensure such a solution reaches their desks before it’s too is late.”

To offset the increased costs if the court’s ruling is upheld, respondents said they will be forced to do the following:

  • 91 percent would increase prices
  • 58 percent would lay off employees
  • 36 percent would reduce the operating hours
  • 18 percent would take other measures
  • 16 percent would close their business
  • 2 percent would do nothing

The survey was conducted by the MRLA September 6-9, 2022. The data represents 307 responses from restaurant and hotel operators representing nearly 2,000 locations and over 75,000 employees — or about 24 percent of Michigan’s hospitality industry.