For over three decades, Tami Jo Schultz has thrived as a waitress, building her career not just on serving food but on creating meaningful connections with her customers. A recent ruling by the Michigan Supreme Court could upend that. This decision, which will gradually phase out the tipped minimum wage by 2029, means that Schultz and 125,000 other tipped workers across Michigan might soon see their tips—and overall income—diminish.
Currently, Michigan’s tipped workers earn $3.93 an hour, with the rest of their income made up in tips. But as the state increases the standard minimum wage to $15 by 2028, these workers will start earning more in base pay, and likely less in tips. Schultz worries that once customers realize servers are earning a higher hourly wage, tipping will decline. “I can’t see me going from $25-plus an hour to—if we’re all getting paid minimum wage, what is the reason for tipping?” she asks.
The Industry Impact: The ruling’s impact extends beyond individual workers. According to a survey by the Michigan Restaurant and Lodging Association, 94% of restaurant operators plan to raise menu prices by an average of 25% to offset increased wages. This could mean higher costs for diners and potential closures for small, independently-owned restaurants that can’t compete with larger chains. With the possibility of 20% of full-service restaurants closing, the industry could see the loss of up to 60,000 jobs.
Economists like Paul Isely of Grand Valley State University warn that while wage increases might seem like a win for workers, they often result in lower tips, negating the intended benefit. “There’s a lot of tipped workers who make substantially more than they would make if we were paying them salaries,” Isely explains.
What’s Next? As Michigan phases out tipped wages, the restaurant industry faces a potential upheaval. For workers like Schultz, this change could mean the end of a career built on personal interaction and generous tipping. For small businesses, it might mean the end of the road.
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