servers

The Battle Begins Over “Irresponsible and Dangerous” One Fair Wage Plan in Michigan

servers

The battle lines are already being drawn as a group calling itself “One Fair Wage” submitted signatures today that would put a mandated minimum wage hike before state voters this coming November. The minimum wage mandate would raise the minimum wage in Michigan to $12 an hour by 2022 and eliminate the tip credit for restaurant workers. Michigan’s current minimum wage was raised to $9.25 an hour in January of this year.

Both the Michigan Restaurant Association and the National Federation of Independent Business have drawn lines in the sand today following the action in Lansing.

At the Michigan Restaurant Association, President & CEO Justin Winslow says, “Simply put, this proposal is irresponsible and dangerous and it will fail in Michigan like it has failed everywhere else.”

Winslow reminds everyone, “In Maine, restaurant workers organized and successfully overturned a nearly identical ballot proposal in 2017 because they know the tip credit works for everyone involved. In Washington, D.C. and New York, elected officials and prominent news media are siding with servers against a similarly cynical play by organized labor because they know it will mean fewer jobs, fewer opportunities and lower incomes for those impacted.”

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Defending his membership, Winslow goes on to say, “The restaurant industry is proud of its unassailable reputation as an industry of first opportunities and second chances and the Michigan Restaurant Association will continue to fight to ensure those opportunities remain for those that need them most.”

Meanwhile, one of the state’s leading small business organizations, the NFIB, responded today to that ballot proposal calling it a “wet blanket” on Michigan’s economic progress.

Charlie Owens is State Director for the Michigan NFIB chapter. He says, “As reported in a study of this proposal by the NFIB Research Center, Michigan will lose 183,000 jobs over the next ten years and there will be a cumulative reduction in Michigan real output of over $76 billion.” He contends, “Sixty-two percent of the forecast job losses are jobs that would have been in the small business sector of the economy.”

Owens argues, “The group pushing this proposal is financed primarily by out-of-state interests having received the bulk of their funding from labor unions or labor union front groups located outside of Michigan.”

Under the Michigan Constitution, any citizen, or group of citizens, can initiate a law by collecting the required number of signatures on a petition for that purpose. If enough signatures are gathered and approved by the Board of State Canvassers, the proposal is introduced into the state legislature as a bill. The legislature has 40 days to act on the proposal. If they pass the proposal it becomes law and does not go on the statewide ballot. If they take no action, or the proposal fails to pass, then it appears on the November 2018 statewide ballot.

Owens says that a survey of small business owners who are members of NFIB showed strong support for intervention by the legislature to keep the proposal off the ballot. He notes, “Michigan must act to keep this misguided proposal off the ballot to prevent the state from moving backward into the mess it was in just eight years ago,” and adds, “If lawmakers allow this proposal to go to the ballot, and it is passed by the voters, a three-fourths super-majority of the Legislature would be required to change the law and Michigan will then be stuck with one of the most stringent minimum wage employer mandates in the country.”

The crew at the Michigan Restaurant Association wants everyone to understand the current Tip Credit program, and shares a few key facts:

1)  The restaurant industry is proud of its unassailable reputation as an industry of opportunity.

  • Over 30-percent of Americans started their career in the restaurant industry. It is the training ground for millions of entry level workers who have built critical skills of personal responsibility, teamwork and accountability.

2) The tip credit business model is the standard across the United States and is preferred by servers.

  • Currently, 43 states operate with a tip credit business model, including every state that borders Michigan.
  • Every tipped employee in Michigan makes at least the full minimum wage. If an employee ever receives less than the full minimum wage including tips, the employer is required by law to ensure every employee makes Michigan’s minimum wage of $9.25/hr.
  • A 2017 statewide poll of Michigan Restaurant Association full-service restaurants showed that servers averaged $17 per hour, with some making significantly more.
  • An industry point-of-sale company called Upserve conducted a survey in 2018 that found 97-percent of servers ranked tipping as their preferred payment method. (https://upserve.com/)

3) Eliminating the tip-credit is unifying restaurant workers against attempts to eliminate the tip credit.

  • In November 2016, a coalition similar to the One Fair Wage campaign was successful in increasing Maine’s minimum wage and forcing the repeal of Maine’s tipped-credit provision. Servers in Maine quickly organized to protest the elimination of the tipped minimum wage and successfully had it reinstated in June 2017.
  • Washington D.C. elected officials and news media are uniting against a proposal to eliminate the tip credit.
  • New York servers are united in opposition to Gov. Cuomo’s attempt to eliminate the tip credit.

4) Eliminating the tip credit will result in significant job loss and irrevocably damage Michigan’s restaurant industry.

  • An economic impact study conducted by the Economic Policies Institute demonstrated that Michigan will lose over 14,000 restaurant server jobs if the One Fair Wage proposal is enacted.
  • The One Fair Wage proposal would increase labor costs of restaurant owners by more than 240-percent, forcing them to increase prices, layoff staff and possibly even shutter their doors.

5) Wage pressures will force automation and drive down job opportunity while increasing costs.

  • In Michigan, there is a 94-percent “Automation Probability” for traditional restaurant employees due to the increase in labor costs according to the Bureau of Labor Statistics.

The Michigan Restaurant Association (MRA) is the recognized leader of Michigan’s hospitality industry, providing essential services to the foodservice community. Founded in 1921, the MRA represents nearly 4,500 Michigan food-service establishments. The industry plays an integral role in Michigan’s economy, employing more than 440,000 people and creating nearly $16 billion in annual sales.

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