(WXYZ) — Starting on January 1, Michigan’s minimum wage will move up to $9.87 per hour from $9.65 per hour, that’s an increase of 22 cents.
That’s not all, in the new year, the tipped minimum wage will go up from $3.67 to $3.75 per hour and the rate for minors who are 16 or 17 is also increasing from $8.20 to $8.39 per hour. Once again, only adding a few extra cents to a Michigander’s wallet.
But with the current inflation rate and price increases on goods and services, who will feel the heat? And most importantly, what’s the solution?
"We are a one-income family, my husband works so it’s a struggle for us and you know we just try to live within our means. But no, 22 cents will not make a difference," said Kimberley Williams.
Williams, a mother of three, is frustrated with Michigan’s minimum wage still under 10 dollars, leaving her family to cut corners just to make ends meet.
"We try not to overeat," she said.
After wages were stagnant in Michigan at $7.40 for a couple of years, in 2014, the state passed a law to raise its minimum wage annually, until it reaches $12.05 by 2031.
Financial expert Rick Bloom says this will be a challenge for many low-income earners.
"You are talking about an increase of less than $500 for the year and unfortunately, we’ve seen inflation take off for the last year, look at the price of gas, just getting to work is a lot more expensive today," said Bloom.
According to the Federal Consumer Price Index, inflation has gone up by 6.2% in the past 12 months, meaning prices are rising 2.5 times faster than Michigan’s minimum wage.
But after post-COVID-induced lockdowns, more and more employers have been sweetening the deal by offering more money, so who does the minimum wage really impact?
Economist Paul Traub says they are students, young adults in the service and hospitality industry as well as unskilled workers.
"Our young adults and labor force are the bedrock of our economy, yet we have done a lot to minimize their success," said Traub.
Besides Michigan, in 2022 there will be only four other states that will still have a low minimum wage after legislative increases: Pennsylvania at $7.25, Montana, at $9.20, Ohio at $9.30, and Nevada at $9.50 for employees who receive health benefits.
"I think one of the confusions ... is that minimum wage is different than a living wage, you know living wage, what it costs someone to live, for a single person that would be close to 13 to 14 dollars an hour," said Bloom.
But there is still hope in the new normal. For instance, entrepreneurs like Joe Renkiewicz are happy to offer better pay packages as they understand the value of hard-working employees.
"Once we opened full time, we are still back to 31 hours, when unemployment stopped, we continued to pay our employees for 40 hours of work. We increased their salary and their commission," said Renkiewicz.
Minimum Wage and Overtime by WXYZ-TV Channel 7 Detroit on Scribd