Michigan’s Tipping Point: The Battle Over Subminimum Wages

New legislation raises base pay for tipped workers, but a full wage overhaul remains on the table as the debate heats up.

To tip or not to tip. And then how much to tip.

For Americans facing rising costs of living and tip jars or screen requests for tips, those questions have raised concerns and debates.

After decades of arguments, in 2018, supporters gathered 400,000 signatures to put the decision up to voters. The initiative called for raising Michigan’s minimum wage and eliminating the sub-minimum wage paid to workers in the service industry. If the measure had passed, the sub-minimum wage, then set at $3.84, would become the state-wide hourly minimum wage, which would rise to $11.73 starting in 2025.

The Republicans who controlled the legislature at the time recognized the popularity of the bill and its power to mobilize large numbers of new voters. Before the initiative was put on the ballot, they formally adopted the measure. When the election was over, they quickly made amendments to water it down.

One of the most prominent advocates for change, One Fair Wage, refused to back down. In July 2022, it submitted 600,000 signatures—nearly double the required number—for a 2025 ballot initiative to raise the minimum wage to $15 an hour and eliminate subminimum wages.

Before that took effect, in July of 2024, the Michigan Supreme Court ruled that the Republicans’ adopt-and-amend tactics from 2018-19 were unconstitutional. Last summer, it looked as if Michigan would become the eighth state to end the subminimum wage—and, potentially, to change the course of tipping traditions.

Minimum wages for all?

Last September, the courts decreed that the original 2018 measure would become law on February 21, 2025. They also called for the gradual, five-year elimination of the sub-minimum wage.

But the powerful Michigan Restaurant and Lodging Association and the Republican-led legislature marshalled forces to prevent—or at least water down—the bill. They argued that restaurant owners couldn’t afford to eliminate the tipped minimum wage, saying that doing so could force restaurants to close, pointing to the hardships the Covid-19 pandemic had inflicted on the industry.

Michael Bright, who has been a server since 2006, and a server at Knight’s Downtown since 2014, watched the back-and-forth between Supreme Court rulings, the restaurant industry, and the state legislature. His biggest worry, he says, was that a raise in the base pay, on top of the volatility in food prices, would mean restaurants would have to charge customers more for their meals—and that would drive customers away.

In October, the legislature agreed to raise Michigan’s minimum hourly wage by twenty-three cents, to $10.56, with minors under eighteen receiving 85 percent of that amount, $8.98.

Five months later, in February, the state’s minimum hourly wage was raised again, to $12.48 for adults and $10.61 for minors, with promises that it would reach $15 by January 1 of 2027.

But what about sub-minimum wages?

Despite strong efforts on the part of One Fair Wage, it wasn’t eliminated. Nor will it be.

The legislature threw tip-dependent workers a bone: raising their base pay to $4.74. Legislators also ordered employers to pay employees the difference if their tips don’t bring their salary up to the state’s minimum wage; noncompliance would mean a fine of as much as $2,500. Under this new law, for the next six years, the subminimum rate will rise by two percent, until it reaches fifty percent of the standard minimum wage in 2031.

The response to the new legislation

When one woman working in a family-style restaurant was asked for her opinion about eliminating—or not—the subminimal wage, she confessed, “Frankly, I found it really hard to keep up with all the changes and reverses. There was a lot of talk about it, but no one really knew what was going on. Right now, it doesn’t feel as if there’s any improvement for the waitstaff except perhaps a few extra dollars at the end of the week—and with the cost of food rising, that probably won’t make enough of a difference.” She declined to be identified: “I need this job, and I’m not sure how my boss would feel about talking to you.”

Ann Arborite Michael Bright works weekend nights in a high-volume restaurant. He often waits on larger parties and takes additional tables if the wait staff is short. This way, he makes between $30 and $50 per hour, “even after taxes and tipping the bussers and bartenders.”

Bright estimates that most servers working a dinner shift downtown (not just fine dining) earn at least $20 per hour from tips—“and often much more.—but at the end of the day, a one-dollar raise in the hourly wage just isn’t going to make a whole lot of difference.”

But, he adds, that’s not the case with lunch servers.

“I haven’t noticed a decline in customers during the dinner hour, but the downtown lunch crowd has been completely devastated since Covid,” he says. “That’s because so many people are working remotely now. Maybe Door Dash and other delivery services are getting the tips restaurant servers were used to.”

And speaking of increasing competition for tips in non-traditional businesses, Bright reports that he and his fellow servers are “frustrated by the creep”—meaning the increasing number of tips requested on laptops or tip jars for employees who are paid at least minimum wage. “I think we need to remember the old tipping standards for services: at least ten percent for a haircut, twenty percent for people who are reliant on tips for their income.”

One of Bright’s colleagues did mention that servers in California and some big cities make substantially more base pay—and the restaurants are still able to stay in business. He thought Ann Arbor (though not the whole state) is affluent enough to do the same.

“I agree on that point,” Bright adds. “I hate the idea that so many people who do essential work in this community (and now I’m also talking about nurses, teachers, etc.) are unable to make a home here.”

The matter of tipping will continue for some time. One Fair Wage is preparing another statewide referendum.