Announcement of minimum wage increases has Leelanau Country establishments looking over their finances with concern for the future of their businesses and the people they employ.
Knot Just a Bar owner David Waskiewicz said it is not uncommon for a server to make $25-30 an hour after tips with a professional server bringing home a yearly W-2 of $50,000. With the announcement of a minimum wage increase over the next five years possibly lowering tips, Waskiewicz said that will be a thing of the past and will be destructive for the restaurant industry in Leelanau and Michigan.
“(The minimum wage increase) becomes something where restaurant owners will have to schedule less people ... We cannot do this without raising menu prices,” he said. “Going out to eat becomes way less affordable and people aren’t going to do it.”
Michigan’s Supreme Court ordered the minimum wage increase in August with justices arguing Michigan lawmakers violated voter rights by adopting and quickly amending a 2018 ballot initiative. The half-decade legal battle over what happened to a potential 2018 ballot measure was capped by the 4-3 decision from the Republican-led legislature.
State and nationwide labor groups have praised the ruling, but restaurant industry experts warn of a catastrophic storm on the horizon.
There are a lot of unknowns on how this will affect Leelanau restaurants’ already inflated menus. But it is almost certain the ruling will jack up prices even further as owners look at automation and cutting human cost.
“This is a pretense to help the service staff when they really want to increase payroll taxes from the employer and the tippedemployee side,” Waskiewicz said.
As of Aug. 4, 2024, Michigan’s minimum wage is $10.33 and tipped workers earn 38% of that for a total of $3.93 an hour. On Feb. 21, 2025, tipped workers will earn 48% of the minimum wage and that will increase over four years until February 21, 2029, when they will earn the full minimum wage. Minimum wage increase schedule: $10 on Feb. 21, 2025; $10.65 on Feb. 21, 2026; $11.35 on Feb. 21, 2027; $12 on Feb. 21, 2028.
Waskiewicz added that payroll taxes at the local Omena restaurant and bar could possibly triple when the five year phase is complete.
The percentage of minimum wage permissible for tipped employees will increase each year, finally aligning with 100% of minimum wage in 2029 and 0% of tip supplement.
“I would be terrified as a server today. Even if menu prices go up, are people still going to tip (when a family meal goes from $100 to $200.) ... The real ones are worried and business owners are more worried. They are pulling out the carpet.”
According to a June survey conducted by the Michigan Restaurant and Lodging Association, 94% of restaurants will raise prices, and staff layoffs could amount to 60,000 workers state wide. In a statement immediately following the court’s decision, Justice Winslow, president and CEO of the Michigan Restaurant and Lodging Association called the pending worker wage increase “a likely existential blow to Michigan’s restaurant industry.”
Even the Michigan Chamber of Commerce has expressed grave concern over the ruling for job providers, workers and customers.
Democrat Attorney General Dana Nessel praised the ruling as “affirmation of the power of direct democracy.”
The ruling also requires Michigan businesses to set up a paid sick time policy with 40 hours of paid time off through the Michigan’s Paid Leave Act.
