Tri-City Sun

State Rep. Mike Hoadley emphasized the necessity for the Legislature to implement common-sense reforms swiftly to mitigate the impact of a recent Michigan Supreme Court decision on small businesses and workers.

The court's ruling mandates an increase in the minimum wage and eventually abolishes the tip credit for servers, bartenders, and other tipped employees. In 2018, the Michigan Legislature adopted two citizen-initiated laws to balance economic growth with worker protection by amending these laws.

“These changes will be devastating for small businesses across our region and the state – especially for bars, restaurants and their employees,” said Hoadley, of Au Gres. “When these laws were amended, careful consideration went into how these reforms would impact all sides. This partisan ruling legislates from the bench, imposes part of a radical national agenda onto our state, and ultimately does the exact opposite of helping workers given the amount of layoffs that will occur. Unfortunately, it continues a pattern we have seen the last few years of policies that make our state less affordable and desirable for workers and job providers.”

A survey by the Michigan Restaurant and Lodging Association highlighted potential negative outcomes from enforcing more extreme elements of the original proposal as mandated by the Supreme Court. Over 92% of restaurants indicated they would need to raise prices, with many predicting increases between 20-25% by early 2025. Additionally, 66% of restaurant owners anticipated employee layoffs, while 20% foresaw closures.

Another survey revealed that 82% of Michigan restaurant servers preferred maintaining the tipping system, with 79% concerned about job loss if tip credits were removed. Similar minimum wage laws enacted earlier this year in California for fast food workers resulted in closures, layoffs, reduced hours, and increased use of self-service kiosks.

Hoadley urged legislative action to prevent local economies, small businesses, and workers from suffering due to these changes set to take effect on February 21, 2025.

“A failure from the majority to urgently act would once again show Michigan Democrats’ detachment from our state’s small business community and hard-working servers who have overwhelmingly opposed the changes to the tip credit,” Hoadley said. “We need to get to work to protect people’s livelihoods.”