The American Society of Employers recently surveyed its members concerning recent and ongoing efforts in Lansing and Washington to increase the state and federal minimum wages. The goal of the survey was to assess the perspectives of ASE members around the issue and determine the impact, if any, they believe an increase would have on their businesses.  The survey, conducted in mid-April (before the latest developments in Lansing—see below), collected data from 161 organizations. 

This issue has been an active one of late, particularly in Lansing. Just last week, the Michigan Minimum Wage bill, S.B 934, passed the state Senate with bipartisan support. In a classic compromise where both sides got some but not all of what they wanted and grudgingly accepted things they specifically did not want, enough Democrats voted for the Republican-generated bill to put it over the top. Here are some of the key elements in the compromise:

• Some Democrats accepted the fact that S.B.934 would repeal the state’s current minimum wage law. If 934 becomes law, this feature would derail the citizen initiative now likely headed for the November ballot. That initiative would only have amended the current law; you cannot amend a law that does not exist.
• Republicans accepted a cost-of-living escalator to be built into the law, the first-ever such escalator in the state’s minimum wage history.
• Democrats accepted a graduated rise in the wage to $9.20/hour (and to $3.50/hour for tipped employees) by January 2017. They consider $9.20 too low.
• Republicans accepted the same rise, which they consider too high.

The ultimate fate of S.B. 934 is anything but certain. The bill now needs to be taken up by the Michigan House of Representatives, and Speaker of the House Jase Bolger, a Republican, has given clear indications that the bill will get a rough reception from its majority Republican members. Gov. Snyder has so far not taken a public stand on one side or the other of the issue. Several statewide business groups have publicly stated their opposition to the bill. The Raise Michigan Coalition, which is driving the petition to get their initiative on the ballot, also opposes the bill.

Given all the potential scenarios moving forward and the likelihood of each one playing out, it seems the least likely scenario is for the minimum wage to stay the same as it is now ($7.40/$2.65). Organizations should begin planning now for an increase in the minimum wage.

Despite such publicly expressed opposition by groups like the state Chamber and the Small Business Association of Michigan, ASE’s survey of actual business organizations revealed a certain amount of support for an increase.  In fact, 42% of the participants supported an increase to the current minimum wage.  While that still leaves a majority of ASE members opposed to an increase, it demonstrates that ASE’s membership is a diverse group that maintains diverse opinions.

Other highlights from the survey include the following:

• Of the 42% of organizations that agree with an increase to the state’s minimum wage, most (61%) agreed with an increase to $10.10/hour.  Thirty-six percent suggested that the rate should be something less than $10.10.
• Of those in support of an increase to the minimum wage, most (64%) recommended an incremental approach where the increase would be phased in over a period of time.  More than half (57%) suggest that the increase be phased in over three years.
• Forty-three percent of participants reported that an increase to $10.10/hour would have “No Effect” on their hiring.  Twenty-five percent indicated that it would have a “Slight Negative Effect,” and another 19% suggested that it would have a “Significant Negative Effect.” Perhaps surprisingly, 9% of respondents said that the increase to $10.10/hour would have either a Significant or Slight Positive effect on their hiring. Four percent were unsure of the potential impact.
• A majority (52%) reported that an increase to the state’s minimum wage would have “No Effect” on their staffing levels.

The makeup of the participants in this survey provides some context to these results.  Specifically, most participants in the study have few employees paid at or near the state’s current minimum wage.  Most organization reported that less than 10% of their workforce is paid at or near the state’s current minimum wage.  This suggests that many in the sample already pay wages at or above the $10.10/hour called for in the ballot initiative, and therefore do not see an increase to the minimum wage having any widespread impact to their business.

ASE will continue to monitor this issue and keep our members informed about any new rules and regulations.  For questions on this survey, or for more information on the minimum wage issue, please contact Kevin Marrs at 248.223.8025