HOLLAND TOWNSHIP Mich. (WOOD) — A legal fight is underway over whether a proposal to make Michigan’s minimum wage $15 an hour will make the November 2024 ballot.
One Fair Wage, the group behind the movement, gathered 610,000 signatures for the petition to raise the state’s minimum wage. The Board of State Canvassers deadlocked Friday in a 2-2 vote along party lines over certifying the petition signatures.
Saru Jayaraman, the president of One Fair Wage, told News 8 Monday the group plans to appeal the decision to the Michigan Court of Appeals. She called it a “partisan, outrageously political move.”
“What are they so afraid of?” Jayaraman said. “Why don’t they want this to go to the voters? It’s because they know this is so overwhelmingly popular across Michigan that they know we’re going to win.”
Though the proposal still has to make the ballot and be approved by voters, the issue is raising alarm bells for restaurant owners like Mike Karas, who has owned Salt & Pepper Grill and Pub in Holland Township for 14 years.
“I promise you, you will see restaurants go out of business,” Karas told News 8 on Monday. “There’s no way around it.”
Karas estimated the minimum wage increase would cost his business around $60,000 to $70,000 per year.
“Why are we trying to fix something that isn’t broken?” he said. “That’s my reaction. It’s perfectly fine. My staff is happy.”
Karas has 65 employees. If the minimum wage proposal goes through, he predicts he will have to lay off up to 25% of his staff.
“Labor has gone up because of COVID,” he said. “Supply and demand on staff because of COVID. Now we’re throwing this on top of it. I’m not playing the COVID card, but it’s absolutely real.”
“It’s already hard enough for a restaurant,” he continued. “We run on really tight margins.”
Minimum wage is currently $10.10 per hour. Under the proposal, it would increase by a dollar each year before topping off at $15 in 2027.
Karas said that increase will be passed along to restaurant customers on their final bill.
“Every year that moves up, prices are going to have to move up,” Karas said. “Sure, we can tighten our belt in other places, but it also has to come from the consumer. The consumer is who’s going to get hurt. The consumer is always who gets hurt.”
His bigger concern, though, is the elimination of the tipped wage. Currently tipped workers get $3.84 per hour, but they end up making much more than that through tips. If the proposal passes, the tipped wage would be eliminated by 2028. Those workers would instead make at least the $15 per hour minimum wage.
“My staff never makes less than probably $30, $35 an hour because of tips,” Karas said. “The hosts probably make $18, $20 an hour minimum every shift because of tips. If that’s eliminated, why would they stay?”
Karas conceded that every restaurant is different: not every employee makes that much.
“The problem is for me and a lot of my restaurant friends, we’re all being lumped together,” Karas said. “I’m 100% happy to see other people make $15, $20, $25 an hour, that’s great. But it’s going to come at the cost of changing all the other restaurants that aren’t having a problem getting their staff paid properly.”
Jayaraman said most Michigan restaurant workers don’t make close to $30 an hour in tips. She argued that wages are “wildly out of sync” with what they need.
“Most tipped workers in Michigan are struggling to make ends meet,” she said.
Jayaraman said tens of thousands of workers left Michigan’s restaurant industry since the pandemic because of low wages. She argued that a higher minimum wage is in restaurants’ best interest to get staff back.
“This is critical not only for families that rely on these wages to feed their children, to pay their bills, to consume, to eat out, to support the restaurant industry,” she said. “It’s also important because these restaurants are not going to have enough staff going forward unless they pay enough to allow these workers to come back.”
She also argued that the restaurant industry will benefit from a higher minimum wage increase because more workers would be able to go out to eat themselves.
“When restaurant workers are paid more, guess what they do, they go and eat out,” Jayaraman said. “Everyone knows that restaurant workers tip better than everybody else cause they know what it’s like to live on tips.”