Minimum wage increase unlikely to take effect on Jan. 1

Michigan
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LANSING, Mich. (WJMN) – The Michigan Bureau of Employment Relations, Wage and Hour Division announced today that the state’s scheduled minimum wage increase is not expected to take effect on Jan. 1, 2021.

Scheduled minimum wage increases are prohibited when the state’s annual unemployment rate for the preceding calendar year is above 8.5%. This rule is because of the Improved Workforce Opportunity Wage Act of 2018.

The Bureau of Labor Statistics (BLS), U.S. Department of Labor calculates the unemployment rate. They use average labor force and unemployment levels for January through December to calculate the percentage.

Michigan’s October unemployment rate was 5.5% but the annual average from January to October in 10.2%. It is highly unlikely to dip below the 8.5% threshold when BLS releases the final 2020 unemployment numbers for Michigan.

If the annual unemployment rate does not fall below 8.5%, then effective Jan. 1, 2021:

  • Michigan’s minimum wage stays at $9.65 an hour.
  • The 85% rate for minors age 16 and 17 remains $8.20 an hour.
  • Tipped employees rates of pay remains $3.67 an hour.
  • The training wage of $4.25 an hour for newly hired employees age 16 and 17 for their first 90 days of employment remains unchanged.

Per statute, future increases to the minimum wage rate will occur in each calendar year following a calendar year for which the unemployment rate for this state, as determined by the BLS, is less than 8.5%. See MCL 408.934(1) and (2).

Michigan’s minimum wage rate will next increase to $9.87 in the first calendar year following a calendar year for which the annual unemployment rate is less than 8.5%. See MCL 408.934(1)(h).

Visit Michigan.gov/WageHour for more information regarding minimum wage.

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