Real impact of minimum wage increase

LANSING, Mich (WLNS) – Effective today, workers in Michigan making minimum wage will see an increase in their hourly wage.

“I think this is a fair increase and it’s small enough that businesses will be able to absorb it,” said Sen. Rick Jones.

Senator Jones believes the minimum wage increase that rose 35 cents today from $8.15 an hour to $8.50 an hour is absorbable. The question is, is it suitable?

It’s designed for a young person just getting into the workforce.

“Well, obviously a minimum wage is a starting wage. It’s designed for a young person just getting into the workforce,” adds Jones. “We have the lowest unemployment out there we’ve had in 16 years. There’s lots of good jobs out there as long as you can pass that drug test.”

Called Public Act 138 of 2014, the Workforce Opportunity Act started raising minimum wage September 1, 2014 when rates went from $7.40 an hour to $8.15 an hour.

Now in it’s second year of increases, the minimum wage will jump again in 2017 to $8.90 an hour.

By 2018, rates will go to $9.25 per hour worked.

Financial planner Ted Feight sees advantages. “The raise will do many things. But, I think the biggest thing it’s going to do is it’s going to have a psychological effect on people more than the actual dollar that they’ll get to go out and spend.”

Rates will raise to $3.52 an hour by 2018 and for tipped workers at a small bar or restaurant there may be some short-term affects.

“I think it will just affect them on a short-term term period of time,” says Feight. “If you look at studies between two states where one wage went up and the other wage didn’t go up it affected a little bit but it just had very little effect in the long-term. In the short-term they may not hire as many people. In the long-term it will be just a wash and the cost will go up a little bit.”

In July 2015 New York raised minimum wage to $15 an hour.

While that increase isn’t happening soon in Michigan, Feight says that due to inflation it will happen at some point.

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