HOLLAND TOWNSHIP, Mich. (WOOD) — Starting this week, Michigan’s minimum wage is above $10 for the first time, part of a phased increase under state law.

Pay could jump even higher come late February to $13.03 per hour. Tipped workers would get a bigger increase, from $3.84 to $11.73 an hour. And by next year, the tipped minimum wage could be gone entirely, raising their pay more.

“These changes are way overdue,” said Saru Jayaraman, the president of One Fair Wage, the group behind the 2018 petition that sparked the changes.

In 2018, advocates tried raising the minimum wage to $12 by 2022 by putting it on the ballot. But Republican lawmakers prevented that from happening by jumping in and changing the law so the increase wouldn’t happen until 2030. In July 2022, a Michigan Court of Claims judge ruled that move unconstitutional. The judge ordered businesses to raise the minimum wage to $12 but agreed that order won’t take effect until Feb. 19 because the case is under appeal. Higher courts could still torpedo the pay increase.

Mike Karas, the owner of Salt and Pepper Pub in Holland Township, said the wage increase would cost him $300,000 annually.

“I know three restaurants that closed this week in Holland alone,” Karas said. “The timing is awful.”

On a typical night, he has 11 to 12 servers working on the tip credit wage. If the changes go through, he said he might have to lay off half of those employees.

“We kind of have a gun to our head,” Karas said. “We don’t have a choice at this point.”

Menu prices would also rise, Karas said.

“The now $13 hamburger is going to be a $16 hamburger,” he said. “The way we’ve looked at it, it’s about a 20% increase for us just to break even.”

In turn, Karas fears fewer customers will come through his doors.

“It’s going to affect my staff, who I love,” Karas said. “And it’s going to affect our customers from a cost standpoint.”

Karas also said many restaurants that are already struggling could shut down completely.

“I don’t see how they’re going to make it,” Karas said. “I really don’t.”

Tracey Bolman has worked in the restaurant industry for 25 years, the last 10 at Salt and Pepper Pub.

“I hope they hear us,” Bolman said. “Because this will hurt us.”

She said she does not want things to change, also worrying about losing co-workers and higher food prices.

“It’ll cause the prices on the menu to go up,” she said. “In order for (Karas) to be able to pay us (more), that has to come from somewhere. The prices on the food will go up.

Additionally, she fears she will lose money in tips.

“It’ll give customers a reason to not tip as much because they’ll hear we’re making a wage,” Bolman said. “So I think it’ll hurt once you take taxes out. I think it will actually have the opposite effect.”

But the president of One Fair Wage said millions of workers nationwide have already left the restaurant industry because of low wages.

“We need policy that will signal to workers (that) wages are going up permanently and it’s worth coming back to work in restaurants,” Jayaraman said. “Because so many of these restaurants have found they’ve raised wages and they still can’t get enough staff to come back to work, because workers don’t trust that these wages are permanent until they are.”

Jayaraman said the pay raise is necessary to bring workers back.

“It’s the right thing to do,” she said. “It’s not just the right thing to do, it’s frankly their only option right now to get enough staff to come back.”

She said that hundreds of Michigan restaurants have “voluntarily” moved to a full minimum wage instead of the tip credit.

“There’s finally momentum to change it because millions of workers are just refusing to work for these wages,” she said.

Jayaraman encouraged working with restaurant owners to make the transition through “training, technical assistance and support.”

“If hundreds of Michigan restaurants have already done this in the last year because they’ve had to recruit staff, if they’ve done it successfully, then our focus should be helping all other restaurants learn what these restaurants have done successfully,” Jayaraman said.

If the change does go through, the Michigan Restaurant and Lodging Association claims 40,000 to 60,000 restaurants would close their doors almost overnight. The association also said 1 in 6 restaurants would shut down forever. One Fair Wage disputes those numbers.

“These numbers are totally fabricated because the states that have already done this have higher small business growth rates, job growth rates, larger restaurant industries than Michigan,” Jayaraman said.

The Michigan Court of Appeals or the Michigan Supreme Court could strike down the ruling before Feb. 19.