September 1, 2014 at 1:00 am

Michigan's minimum wage takes first step up

'Any raise in wages is a big plus for us,' said Mya Hill, with her boyfriend, Jonathan Lamb, and their son. They work in fast-food restaurants. (Clarence Tabb Jr. / The Detroit News)

Mya Hill is getting a small raise today, and it couldn’t come at a better time.

Hill, 24, is making $7.70 an hour and will receive a 45-cents-an-hour bump when the state’s minimum wage of $7.40 increases to $8.15 an hour on Labor Day. The raise will make a difference for Hill because her boyfriend also works at a fast-food outlet and they have a son who will turn 2 in December.

“Any raise in wages is a big plus for us,” said Hill, a Lincoln Park resident who has worked at Checker’s for four years. “Every little bit counts, definitely.”

Today’s wage increase is the first in a series of steps that ultimately will boost the state’s minimum wage 25 percent over four years to $9.25 in 2018. It then will automatically rise annually based on inflation.

Michigan this year has joined nine other states in approving mandatory wage hikes, and its rate is now the ninth highest in the country. Today’s increase marks its first minimum wage hike in seven years.

Supporters of the measure said the new wage will put more money in the pockets of 1 million Michigan wage earners and help the working poor. Under the new law, the state’s base hourly wage will rise well above the $7.25 federal rate.

'It's a challenge'

But many businesses, including the Michigan arm of the National Federation of Independent Business, argue the required wage hike will force firms to make cuts in light of raising costs.

Businesses are still struggling and the economic recovery is slow, said Charlie Owens, the federation’s state director.

“It is a challenge because the government can dictate our costs, but nobody dictates our revenues,” Owens said.

“To have these kinds of things pop up when we’re trying to climb out of the ditch isn’t helpful at all.”

The options, he said, are to make adjustments in the labor force or go out of businesses.

“If I have five employees, four will get a raise and one will get a pink slip,” Owens said.

Still, the tiered raises in Michigan are a “kinder and gentler” option than the $10.10 an hour ballot measure sought by some labor supporters, he said.

The Raise Michigan proposal for $10.10 failed to make the Nov. 4 ballot because the state’s election board eventually determined it didn’t have enough valid registered-voter signatures. Before its demise, it helped prod the Republican-controlled Legislature — joined by many Democrats — to raise the minimum wage in four stages.

“I commend my partners in the Legislature for finding common ground on a bill that will help Michigan workers and protect our state’s growing economy,” Gov. Rick Snyder said while signing the measure into law in May.

Snyder’s Democratic election opponent, former U.S. Rep. Mark Schauer of Battle Creek, praised the new law in May. But Schauer argued Republicans passed the $9.25 rate because they “saw the handwriting on the wall,” with public opinion polls showing a minimum wage increase was favored by a strong majority of Michigan voters.

Michigan was the first state this year with a Republican-led Legislature to raise its minimum wage rates, according to the National Conference of State Legislatures.

Lawmakers were particularly nervous about a provision in the Raise Michigan proposal to boost to $10.10 the $2.65-per-hour “tipped” minimum wage for food servers and bartenders who rely mostly on gratuities. Restaurant industry leaders said the $10.10 rate would put many eateries out of business. The fear was shared by restaurant owners and the Michigan Restaurant Association.

“Anytime you have an increase in labor costs, you may see an increase in menu prices,” said Brian DeBano, president and CEO of the Michigan Restaurant Association.

The profit margin in a restaurant is between 4 and 5 percent, he said.

When the minimum wage was raised in 2007, about 58 percent of restaurants raised menu prices, DeBano said. He expects prices in many restaurants will rise this year to offset the increased labor costs.

The legislation Snyder signed will boost the state’s tipped minimum wage gradually to $3.51 an hour by 2018. After that, it also will go up annually based on inflation.

At the national level, President Barack Obama has backed increasing the federal minimum wage to $10.10 an hour, but the proposal has gotten no traction in Congress where the Democratic-controlled Senate and Republican-led House disagree on the issue.

Tradeoffs found

A Congressional Budget Office study released in February highlights the tradeoffs of increasing the minimum wage.

An increase to $9 an hour across the nation would raise an estimated 300,000 people nationwide out of poverty, but put 100,000 laborers out of work, according to the CBO report. The higher $10.10 rate would lift 900,000 people out of poverty, but result in the unemployment of 500,000 workers, the study projected.