Many Michigan minimum wage workers can expect to see higher paychecks over the next few years.
After the House Government Operations Committee approved a substitute bill allowing a gradual increase to the state minimum wage from $7.40 per hour to $9.25 per hour earlier in the day, Governor Rick Snyder signed the bipartisan bill into law Tuesday evening. The original Senate Bill 934 would have raised the minimum wage by a smaller margin.
In 2018, the minimum wage will begin to index for inflation. That means as goods and services increase in price over time, the designated $9.25 will increase as well, ensuring the wage can continue to provide workers with a livable income. Five other states, including Colorado and Washington, apply inflation indexing on the minimum wage – a practice already used with Social Security payments and other benefits.
The republican-dominated Michigan legislature intended for the bill to undermine the Raise Michigan campaign, a civil rights group that aims to increase the minimum wage to $10.10 by 2017. The coalition planned to submit a petition with more than 300,000 signatures to the Secretary of State Wednesday afternoon to call for a ballot initiative in the November elections.
Although the new law allows a lower minimum wage than what national Democrats have been promoting, as when President Barack Obama visited the University this April, many Michigan legislators responded positively to the new bill.
Democratic gubernatorial candidate Mark Schauer voiced his approval at the substitute bill in a press release last November. In the press release, he said he would like to see the minimum wage raised to $9.25 per hour, with index for inflation.
Many Democrats were pleased with the Wednesday approval of their minimum wage proposal, despite the bill falling short of the $10.10 goal.
“I wish we could have had $10.10 … but it was a significant step forward, and it eliminates leaving this issue up to chance at the polls in November,” State Rep. Adam Zemke (D- Ann Arbor) said.
Zemke said some legislators are reluctant about raising the minimum wage for they believe it will eliminate job opportunities. When the Obama administration originally proposed an increase to $10.10, the Professional Budget Office estimated how many jobs would be lost with the hired numbers. They found that 150,000 people would lose their jobs, but 700,000 people would be pulled out of poverty. As the passed bill was lower than $10.10, both numbers would be lower, but the ratio would remain about the same.
The economic definition of poverty is based on those who receive public assistance, which takes an economic toll on a state’s budget.
“If you are significantly reducing the amount of people on public assistance … that's huge for not only for the quality of life improvement for (those people), it is also a significant decrease of a burden on the state,” Zemke said.
Public Policy Prof. Sandra Danziger said she was also pleased with the new increase, but hopes for a higher minimum wage in the future.
“The Michigan minimum wage increase will help many people and is an important step,” Danziger said. “It is less than the federal call for $10.10 per hour and far less than a living wage. And, it continues to treat tipped workers unequally. Low wage work without either benefits or opportunities to move up creates long term economic insecurity.”
On the contrary, Economics and Public Policy Prof. Alan Deardorff said a significant increase in minimum wage will harm the national economy and boost unemployment. However, because the number has remained relatively low over the past few years, he does not see this increase as a threat.
“I'm not a big fan of the minimum wage, since if it is set too high, I do believe it will cause more harm through unemployment than benefit through increased wages of those who remain employed,” Deardorff said. “But the current minimum wage in the US is low enough that I don't think that is a big concern, and since it hasn't risen for many years, it needs to be increased.”