Ottawa County tipped workers in limbo over how their wages could change this year

OTTAWA COUNTY — As local restaurant servers and bartenders continue to take orders with a smile, uncertainty looms over their livelihood.

Service industry workers are questioning their future as Michigan lawmakers continue to debate potential amendments to a new tipped wage law that will take effect Feb. 21.

The state minimum wage will rise to $12.48 — up from $10.56 — an hour. Tipped wages are scheduled to be gradually phased out after the Michigan Supreme Court ruled last summer that the Republican-controlled Legislature in 2018 acted unconstitutionally when it adopted a pair of voter initiatives on minimum wage and paid sick leave — in order to render them moot — then later amended them in the same legislative session.

One of these proposals sought to raise the minimum wage, while the other aimed to introduce paid sick leave for workers. 

That same ruling will also increase the base pay for tipped workers from the current $4.01 an hour to $5.99. Tipped workers will receive the full minimum wage if their base pay and tips combined do not reach the standard minimum wage.

The increase scheduled for Feb. 21 — the second of the year after a pre-planned 23-cent minimum wage increase that took effect Jan. 1 — is part of a broader plan for the state minimum wage to reach $14.97 by 2028 with future increases based on inflation. The base pay for tipped workers is set to be phased out, with those workers making the standard minimum wage by 2030.

Restaurant owners and servers say the proposed changes could mean higher prices for customers because the increased wages would put more of a strain on overhead cost.

“I think if you're working for your tips, you’re going to work harder and have more of an incentive to please the customer,” said a bartender who works in downtown Holland who requested anonymity. “If I was getting paid minimum wage without that incentive, I think a lot of people would just do the bare minimum.” 

According to the National Restaurant Association, restaurants typically have paper-thin profit margins — the average eatery has a pre-tax profit margin of roughly 5% — which means significant cost increases are not sustainable for most restaurants. 

“I think if you're working for your tips, you’re going to work harder and have more of an incentive to please the customer. If I was getting paid minimum wage without that incentive, I think a lot of people would just do the bare minimum.” — Holland bartender

That could lead to price hikes or staff cuts to keep restaurants in the black.

George Bekmetjev, a server at The Curragh Irish Pub in Holland, said an increase in base wages could force businesses to layoff workers and cut back on hours. The Hope College student said his job helps cover odds while he is in school.

Bekmetjev’s coworker, Ashley Bradford, a longtime bartender, also said a wage increase would negatively affect both corporate and small business tipped workers. 

“We make more than $15 an hour on a busy night,” Bradford said. “I’m also for workers making a liveable wage, but I’d rather them keep it lower (wages). No matter what the outcome is, I'm trying to keep a positive mindset.”

Proponents of phasing out the base pay wage argue that tipped workers will have a more stable income.

Small business owners, like Jeremy Grossenbacher who owns Coopersville Brewing Co., said increased labor costs could lead to restaurants revamping their business models. 

“Our brewery doesn't provide table-side service. Instead, guests place their orders at the front window, mention their table number, and a staff member will bring out your food when it is done. With this model, our front-of-house staff take on multiple roles, from cashiers to food runners," Grossenbacher said. “We’ve seen some customers who aren’t fans of this system, especially if they were expecting table-side service, but we believe it suits our style.

"More businesses might start adopting this approach to reduce overhead by consolidating roles, though it’s not a one-size-fits-all solution," he said.

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Losing that personalized service could make the rules on tipping murkier than they already are. According to a Pew Research Center poll in November 2023, most Americans (77%) said the quality of the service they receive is a major factor in deciding whether and how much to tip.

Meanwhile, the state Legislature is divided on how to proceed.

House Republicans — control flipped to Republican control this year — passed a bill to stop the planned Feb. 21 changes and keep tipped workers earning 38% of the state’s minimum wage as base pay.

Under the plan from the Democrats, who control the Senate, tipped workers would continue receiving a base pay of 38% of the minimum wage. However, that percentage would increase over the next 10 years until reaching 60%.

Both chambers have yet to consider the other's bill.

— Christopher Thome covers business and development for Ottawa News Network. Contact him at cthome@ottawanewsnetwork.org.