Democratic candidate for Governor, Mark Schauer, has declared that, if elected, he would work to raise Michigan's minimum wage from $7.40 per hour to $9.25 per hour. Once fully implemented, the Schauer plan would result in Michigan having the highest minimum wage rate in the nation, thereby making Michigan uncompetitive in the race for jobs.
The Michigan Chamber believes government should work to implement policies to help workers get jobs, not actively increase the cost of hiring workers and create barriers to entry. Currently, Michigan is one of only 19 states that has a minimum wage rate higher than the federal minimum wage. The Schauer proposal would increase the minimum wage rate in three steps: to $8 per hour in 2015; $8.60 per hour in 2016; $9.25 in 2017; and tie future increases to the rate of inflation.
Although the intent of an increase is to help low income workers, studies show that it can have the opposite effect by driving up the cost of entry-level jobs, encouraging employers to hire higher-skilled job applicants, and generally increasing the cost of doing business in the state. Even if jobs are not cut, employers respond to higher labor costs by shifting their hiring focus to better skilled employees or more capital-intensive production, leaving the least skilled out of the labor market. Furthermore, labor economists estimate that for every 10 percent increase in the minimum wage rate, employment among those affected drops by five percent.
In this debate, we will continue to advocate that Michigan needs focus on improving employment opportunities for Michiganders, not passing policies to push them towards the unemployment line.
Please contact Wendy Block, Director of Health Policy and Human Resources, with any questions.