If you are currently earning the minimum wage rate in Michigan and were looking forward to your next pay hike to take place in the New Year, don’t hold your breath. The Michigan Bureau of Employment Relations, Wage and Hour Division has announced that the state’s scheduled minimum wage increase is not expected to go into effect on January 1, 2021 after all. Blame the unemployment rate during the pandemic.
Michigan’s Improved Workforce Opportunity Wage Act of 2018 prohibits any scheduled minimum wage increases when the state’s annual unemployment rate for the preceding calendar year is above 8.5-percent.
The state’s 2020 annual unemployment rate, which is determined by the Bureau of Labor Statistics (BLS), U.S. Dept. of Labor, is calculated by using both average labor force and unemployment levels for January through December.
While Michigan’s October unemployment rate continued its downward trend and is 5.5-percent, the annual average from January through October currently sits at 10.2-percent and is highly unlikely to dip below the 8.5-percent threshold when BLS releases the final 2020 unemployment numbers for Michigan.
If, as expected, the annual unemployment rate does not fall below 8.5-percent, then effective Jan. 1, 2021:
- Michigan’s minimum wage will remain at $9.65 an hour.
- The 85-percent rate for minors age 16 and 17 remains $8.20 an hour.
- Tipped employee rates of pay remain $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 the state, as determined by the Bureau of Labor Statistics, is less than 8.5-percent.
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-percent.
You can visit http://Michigan.gov/WageHour for more information regarding minimum wage.
