Updates About Economy

The Michigan Senate has passed a bipartisan bill, SB 8, that will gradually raise the tipped minimum wage to 50% of the regular minimum wage by 2031, rather than completely phasing it out as originally planned. The bill, introduced by Democratic Senator Kevin Hertel (D-Saint Clair Shores), received more support from Republicans than Democrats, with a 20-12 vote in favor. Under the bill, the tipped wage will remain at 38% for the rest of 2025, then increase by 2% annually until it reaches 50%. This compromise comes as the Legislature faces a February 21 deadline to amend the minimum wage and Earned Sick Time Act (ESTA) before they take effect.

SB 8 is tie-barred to HB 4002, the ESTA bill, which remains in a Senate committee. As a result, the minimum wage changes cannot be signed into law without also changing the paid sick time bill. While many businesses and Republicans view the bill as a necessary adjustment to avoid job losses in the restaurant industry, some Democrats and labor advocates criticize it for rolling back worker protections originally mandated by a court order.

Despite the mixed response, legislative leaders view the bill as a step toward a bipartisan solution. Senate Majority Leader Winnie Brinks (D-Grand Rapids) and Hertel expressed optimism about continued negotiations, while Republican leaders emphasized the need to balance business interests with wage increases. House Speaker Matt Hall (R-Richland Township) highlighted the importance of compromise, stating that the deal should benefit workers rather than just businesses or labor unions. With the deadline approaching, both parties acknowledge more work is needed to finalize a consensus on the state’s wage and sick leave laws.

Last week, Governor Gretchen Whitmer delivered her “Road Ahead Address” at the Detroit Auto Show, focusing on Michigan’s economic future and the critical role of our auto industry. She highlighted bipartisan achievements, including passing over 1,400 bills, and outlined her vision for Michigan to lead the evolving “auto ecosystem,” encompassing battery factories, software companies, and advanced manufacturing.

Whitmer proposed replacing expiring economic tools like the bipartisan job fund and road bonding plan with innovative initiatives such as a “Make it in Michigan” job fund, tax incentives for hiring Michigan workers, and investments in housing, transit, and infrastructure. She emphasized collaboration with both state and national leaders to secure Michigan’s position as an auto industry leader and safeguard its economy from global competition.

Additional insight on Whitmer’s goals for the 103rd legislature will be revealed in February during her State of the State Address and presentation of the Fiscal Year 2025-2026 Executive Budget Recommendations.

A recent report by the Senate Fiscal Agency (SFA) showed that Michigan’s state revenue from major taxes and net lottery earnings reached $2.9 billion in November, marking a 10.5% increase compared to one year ago. Partially credited for the increase was the $147 million above anticipated projections for collections, including $31.8 million above forecast for the General Fund and $103 million exceeding expectations for the School Aid Fund. Additional funds were allocated to entities such as the Local Community Stabilization Authority and gaming-related programs.

Income tax revenue led the growth, totaling $1.1 billion for November, an 11.4% increase from last year and $6.2 million higher than projected. Use tax collections also saw a significant 7.4% increase, reaching $234.7 million. However, not all areas experienced growth; sales tax receipts dipped 1.5% year-over-year to $843.5 million, with motor vehicle sales tax collections hitting their lowest level since June 2024.