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With impactful minimum wage and paid sick leave measures set to be implemented in February, state Rep. Matthew Bierlein expressed significant concern about Michigan’s climate for job providers and the long-term effects on workers, business owners, and the economy.

A recent Michigan Supreme Court decision raises the minimum wage and eventually eliminates the tip credit for servers, bartenders, and other workers who frequently earn more through tips than they would with a higher minimum wage. In 2018, the Michigan Legislature adopted two citizen-initiated laws to ensure that a minimum wage increase and new paid sick leave rules worked for all Michiganders. Amendments to these laws aimed to balance economic growth while protecting workers from layoffs or reduced hours.

A recent survey conducted by the Small Business Association of Michigan (SBAM) found that 78 percent of respondents had already increased pay by at least five percent for their employees in the past year, with 26 percent reporting pay increases of 10 percent or more despite inflation raising costs and creating uncertainty. Additionally, seventy-nine percent of small business owners surveyed said they already offer flexible paid time off.

“Many local job providers throughout our region and the state are already moving in this direction and supporting their hardworking staff without court mandates,” said Bierlein, of Vassar. “In February, that all goes out the window, and new burdensome directives will cause havoc for small business owners and artificially spike costs. These directives will force some to lay off their employees, cut hours or close entirely. I have spoken with many business owners and employees who are scared about the effects these new measures will have. In the next few months, Democrats and Republicans in the Legislature should be looking for a fix that considers every part of this equation and works for everyone.”

The changes have created a problematic climate for job providers. Small businesses reported less optimism overall in the survey with a 13-point drop in short-term outlook. Thirty-seven percent were optimistic about their prospects for the next six months compared to February when 50 percent reported being optimistic. A similar drop was found regarding long-term survival prospects; 54 percent reported optimism about keeping their doors open compared to 66 percent in February.

In addition to the SBAM survey, a recent study by the Michigan Restaurant and Lodging Association found that more than 92% of restaurants said they would be forced to hike prices if language from the original, more extreme minimum wage and sick leave proposals included in the Supreme Court’s modifications go into effect in February, with many anticipating increases of 20-25% by early 2025. Sixty-six percent of restaurant owners said they would be forced to lay off employees, while 20% indicated they might shut down entirely.

“There are multiple red flags waving right in our face as to how these changes will impact workers, small business owners and Michigan consumers,” Bierlein said. “The time is now to act. As the Legislature works on a solution to this court-created crisis, I look forward to hearing from my colleagues on the other side of the aisle who have been fairly quiet so far.”