To tip or not to tip? And how much to tip?
For Americans facing rising costs of living and tip jars or screen requests for tips everywhere, those questions have been a longtime source of concerns and debates. But here in Michigan, for the past seven years, legislators, courts, service workers, service-based businesses, the Restaurant and Lodging Association, and consumers have been debating an additional question: Should servers be paid the state’s full minimum wage?
The wage war began in 2018, when One Fair Wage, a national coalition of activists, workers and organizations fighting for a higher minimum wage for tipped employees, gathered 370,690 signatures to put the decision up to voters. If the measure had passed, the wage paid to tipped workers, then set at $3.84, would gradually be increased to match the statewide hourly minimum wage—which the same proposal would increase to $12 by 2022 and thereafter index to inflation.
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 preempted a vote by passing the measure as legislation. But when the election was past, they quickly made amendments to water it down.
Years of rancorous legal battles followed.
One Fair Wage refused to back down. In July 2022, it submitted 600,000 signatures—nearly double the required number—for a 2024 ballot initiative to raise the minimum wage to $15 an hour and eliminate subminimum wages. The group suggested that one million Michiganders would benefit.
Then, 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 here in the Wolverine State.
But that didn’t happen.
Related: Tipping Point
Waiting Tables
Last September, the court decreed that the original 2018 legislation would become law on February 21 of this year. As before, the subminimum wage would be gradually eliminated over a five-year period, while the minimum would gradually be raised to $15.
But the powerful Michigan Restaurant & Lodging Association (MRLA) and the Republican-led legislature marshaled forces to prevent that from happening—or at least water it down. In its own survey of 209 restaurant operators, 92 percent of respondents said that eliminating the tip credit would cause prices to increase; 66 percent said they’d have to lay off employees; and 67 percent said they’d consider changing their business model away from full-service. The solution, the group says on its website, is for the legislature to “protect Michigan’s tip credit.”
Michael Bright, who has been a server since 2006, and 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 more for their meals—and that would drive customers away.
In October, the legislature voted to raise Michigan’s minimum hourly wage by twenty-three cents, to $10.56. (Minors under eighteen receive $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. Unless something else changes.
And then came a bigger question: would the tipped minimum wage be eliminated? The answer, so far, is no.
The legislature raised the base pay for servers to $4.74, 38 percent of the full minimum wage. Under the new law, for the next six years, the subminimum rate will continue to rise by two percent per year, until it reaches 50 percent of the standard minimum wage in 2031. Legislators also created a civil fine of as much as $2,500 for employers who don’t pay servers the difference if their tips don’t bring their salary up to the state’s minimum wage.
The financial situation for servers may also be affected by several provisions in President Trump’s “big, beautiful bill,” which was moving through Congress in May, combining drastic cuts in spending on everything from Medicaid to the arts with massive tax cuts. As he’d promised during the campaign, one provision calls for eliminating taxes on overtime pay and tips—although those tax cuts would be temporary, expiring after 2028.
Related: Target: The Arts
Of the half dozen restaurant owners contacted by the Observer, none were willing to go on record regarding their position on these wage changes or their earlier lobbying positions. And only a few servers were willing to be quoted.
When one woman working in a family-style restaurant was asked for her opinion about eliminating—or not—the subminimum 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.”
Before the legislature acted, a hostess at a restaurant on Jackson Rd. explained why she had switched jobs, from serving to hostessing. “Before Covid, I used to make very good money as a server. But I think fewer people are eating out, and more people and places are expecting tips than before, which means servers have more competition for tips. I decided to become a hostess—at least I have a dependable paycheck every week.”
Michael Bright’s day job is as one of the Observer’s assistant calendar editors. On busy nights in a high-volume restaurant, he often 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. There is a great deal of variability—business volume, check average, tip-outs of bussers and bartenders—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 may not be 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 DoorDash and other delivery services are getting the tips restaurant servers were used to.”
And speaking of increasing competition for tips in nontraditional businesses, Bright reports that he and his fellow servers are “frustrated by the creep”—meaning the increasing number of tips they see on screens 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.”
Bright volunteered to survey others for their opinions, but reported back: “I spoke with a few fellow servers about the article. No one seemed particularly eager to be interviewed. I will say that the general consensus is that we’re all pretty happy with the status quo.”
Be that as it may, One Fair Wage has indicated that the wage war isn’t over yet. Still committed to ending the subminimum wage, the group is again gathering signatures to place a statewide referendum on Michiganders’ ballots.
Meanwhile, restaurants and servers are hopeful that customers realize that service workers’ income is still dependent on customers who value good service—and want to see their favorite restaurants survive during this era of rising food and labor costs.