Zingerman’s is among the restaurant groups puzzling over the impact of eliminating the lower minimum wage for tipped workers, but it also includes one of the only local restaurants that’s not affected: cofounder Ari Weinzweig points out that Miss Kim’s servers have never been paid less than the full minimum wage. | Photo by John Hilton
In July, the Michigan Supreme Court restored a 2018 law that raised the state’s minimum wage, expanded sick-leave requirements, and phased out the subminimum wage for workers earning tips.
The federal minimum wage, $7.25 an hour, hasn’t been increased since 2009. The subminimum wage had been frozen since 1991 at $2.13 (though restaurant owners are supposed to make up the difference if tips don’t cover the gap). States can set their own minimums, however, and in 2018, supporters gathered enough signatures to place a measure on the ballot in Michigan. The legislature’s Republican majority prevented a public vote by passing the law themselves—only to gut it later in the same session.
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The state supreme court ruling means that unless the legislature acts again, Michigan’s minimum wage will go up by an estimated $2 next year, to $12.50, then continue to increase through 2028, to about $15. After that, wage increases will be tied to inflation.
The lower “tipped wage,” now $3.93 per hour, is scheduled to jump more than 50 percent next year, to about $6 an hour. It would continue to increase gradually over the next five years and phase out completely once it matches the state’s minimum wage.
“I think the new legislation is good for the people working in the restaurant and service industries,” says Jeffrey Knight, whose family runs three steakhouses and two markets. “But what would truly help to transform the industry is if the general public would treat service workers everywhere with respect—something I see lacking far too often. Respect includes leaving generous tips for conscientious service.”
The Observer contacted seventeen additional restaurant owners, none of whom chose to go on the record about the impact the legislation could have on their industry. Lisa Schultz, managing partner of Zingerman’s Roadhouse, explained why in an email:
“Thinking over the topic of discussion, we have not yet formulated a stance or concrete plan of action for the restaurant. I’m not sure I’d have much to give you at this time.” She offered to talk “once we establish a plan for ourselves.” At least things will be simpler at Zingerman’s Deli and Miss Kim—cofounder Ari Weinzweig confirms that both have always paid at least the full minimum wage.
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Sharing the Wealth
Workers earning the tipped minimum, meanwhile, worry that customers will tip less if their base wage increases. “I know that change is coming, but I don’t know what to think about it,” says Alexis, a server at a downtown bar and grill. “I am a single mother trying to finish college. On a good week and weekend, I can earn enough in tips to pay my rent. I have plans to get out of the service industry after graduation—but I’m afraid of anything that might change the current tip structure. I need every dime I can earn right now.”
A waitress at a popular restaurant on Jackson Rd. has seen business drop as food prices have risen—and tips have dropped accordingly. “I’m worried I’ll fall behind financially,” she says. “I think that people are being asked to tip in so many places nowadays that they’re either resentful of tipping or they have less money to spend on tips here.”
A hostess in the same restaurant agrees. “I waitressed for nearly thirty years and made a good living, but recently I had the chance to have a regular salary as a hostess. I jumped at it. Even though there are weeks when I make less money than I did waitressing, at least I have a dependable salary.”
They’re right to be concerned. A recent study by the marketing technology company Vericast reported “a noticeable decrease in consumers dining out, especially with consumers that have a household income under $75,000.” In the last year, menu prices rose an average of 5.1 percent, while overall grocery prices rose 1.2 percent. Some families are responding by trading down from full-service restaurants to fast food, and others are cooking at home instead.
“I’m considering another line of work,” another server admits. He has been waiting tables for a decade.
At least one business has confronted the tipping issue directly. Television and radio ads for Domino’s Pizza now offer customers a $3 coupon for their next pizza if they tip the drivers at least $3. But it’s an exception.
The restaurant industry argues that the low tipped wage is crucial for smaller restaurants. In a statement after the court decision, Michigan Restaurant and Lodging Association CEO Justin Winslow called it “a likely existential blow to Michigan’s restaurant industry … 40% of full-service restaurants in Michigan are already unprofitable, meaning this decision is likely to force more than one in five of them to close permanently.” The association says it would support expediting the minimum wage increases—if the legislature retains the subminimum wage.
At this point, the ruling is too recent to truly predict how—or if—it will affect service industries and tipped employees. But at least one customer, lawyer Ellen Rostker, is optimistic that they’ll adapt.
“I don’t think restaurants have to worry about their future when the changes are coming gradually, if they continue to offer their customers quality food, a pleasant atmosphere, and good service,” Rotsker says.
“I worked in the service industry when I was a kid, and I will continue to tip generously, no matter what the base pay is.”
