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New Minimum Wage Changes Could Cost Servers Money

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More money will be coming to the paychecks of those that work at the state minimum wage level. But there may be some major changes coming with that increase that could shake the hospitality industry more than they have seen.

In the new year, the minimum wage in the state of Michigan is going to go up to $10.10/hour and for tipped wages, it’ll go to $4.25. A lot of people are happy to hear that but there’s also push saying that tipped wages are unconstitutional. The State Court of Appeals is going to rule on that, and if they agree that it’s unconstitutional, that means tip servers will be paid as much as everyone else.

Even people in the industry, who will get that raise, are saying that may be a bad idea

“There’s a lot of worries that it would actually result in server’s making less money, not more,” said Brian Calley, President of the Small Business Association of Michigan.

There are not many people pushing back against raising the state minimum wage. Most places are forced to pay well above that just to get workers in this climate.

They are worried about a possible court ruling that would do away with the tipped wage system.

“Over the course of the next year, it would eliminate the tipped wage difference,” said Calley. “Instead of servers working on a tips system, it would move them to the regular minimum wage.”

The ruling would also bump the state minimum wage to $12 an hour, for everyone. If you’re a server or bartender, you are most likely making much more than that.

“I did a survey of my servers to see what they are taking home and it’s over $25 an hour,” said Rick Swindlehurst, owner of several Mt. Pleasant restaurants and President of the Michigan Licensed Beverage Association. “They won’t be making that if you take away the tips system.”

The tip system wouldn’t go away, per se, but would customers tip the same amounts if they knew servers made more and now their meals cost more?

“It’s not really known how the consumer will respond to tip changes, when you know that they will absolutely have to pay much much higher cost than they did in the first place,” said Calley.

At a time when restaurants are struggling to fill positions, they assume more people will leave for a better career elsewhere.

“We’re going to have trouble hiring servers and bartenders” said Swindlehurst, “They’re not going to want to work for 12 bucks an hour and take a chance on maybe getting tips.”