89.1 WEMU

Michigan's Higher Minimum Wage May Have Some Impact On Local Businesses

Jan 2, 2017

Money
Credit Dustin Moore / flickr.com

The New Year has arrived.  Among the changes for 2017 is an automatic pay raise for thousands of workers across Michigan.  The state's minimum wage has increased by 40 cents to $8.90 an hour.  There is a lot of conversation on the longer-term impacts of higher wages.


If you across the country, you will find arguments for and against increasing minimum wage standards, often in the same communities.  Some will argue a $15-an-hour minimum wage in Seattle has helped the economy and increased the standard of living.  Others argue it is putting owners of smaller shops out of business and has resulted in a decline in available jobs.

While $8.90 an hour isn't $15, the increase does add up.  Consider Eastern Michigan University, where there are more than 3,000 student employees who will see a bump in pay.  Sara Kersey-Otto is EMU's Director of Career Development and Outreach.  She says an increase in wages won't necessarily mean a bigger paycheck.

"Some may reduce the number of hours slightly that a student employee works in order to cover that additional cost.  Some may hire fewer employees for the year.  And probably the most common will be that some departments may reallocate money from one area within their department budget to another in order to maintain that current hiring level."

Down the road, at the University of Michigan, the impact won't be nearly the same.  A school spokesperson told WEMU the minimum wage increase will not impact finances or employment levels because U-M already pays student employees above the new standard.

Outside the education realm, there are small businesses in Washtenaw County to consider.  Michael Rogers is Vice President of Communication for the Small Business Administration of Michigan.  He says most will absorb the impact, at least in the short term.

"In large part because it's such a tight labor market in Michigan right now, I don't think you could find probably any small businesses that are going to be paying at the minimum wage level.  They'd have to bid their wages up in order to get the workers they need."

Rogers does say the higher wages could become a problem with the advent of more automation in various industries.  He says if it prices below minimum wage levels, then there would likely be more decline in employment levels.

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— David Fair is the WEMU News Director and host of Morning Edition on WEMU.  You can contact David at 734.487.3363, on twitter @DavidFairWEMU, or email him at dfair@emich.edu