Contact: Robert P. Hunter, Director of Labor Policy, (989) 631-0900

MIDLAND-A Michigan House of Representatives committee has approved legislation that would prohibit local governments from enacting or enforcing “living wage” ordinances that set wages higher than the state’s minimum wage.

Thirteen Michigan local governments have instituted such ordinances, which make it illegal for employers that conduct business with the municipality to pay workers less than the amount set by that municipality. The hourly rates range from $8 to $11 or more, with and without benefits. The state minimum wage is $5.15 per hour.

The House Employment Relations, Training, and Safety Committee, chaired by Rep. Leon Drolet (R-Clinton Twp.), approved HB 4160 on a vote of 6-3 last evening. The bill was introduced by Rep. Fulton Sheen (R-Plainwell).

At the committee’s hearing, Mackinac Center for Public Policy labor law analyst Paul Kersey testified https://www.mackinac.org/5037 that the economic losers of living wage ordinances are “those unable to find work because potential employers cannot afford the increased wages mandated by living wage laws.”

Kersey cited data that show for every 10 percent increase in the minimum wage, employment among those affected drops by 2 percent. Kersey said the job losses caused by a higher minimum wage tend to be concentrated among older workers - those most likely to have dependents.

“Government can’t make a worker worth more to an employer just by making it illegal to pay him less,” Kersey said. “Why would a company hire someone for $10 an hour when the market values his work at only $6 an hour? That worker will either not get the job, or he can lose the one he has,” he said.

Kersey also told the legislators that preempting local living wage ordinances could ease pressure on the state’s projected $1.8 billion budget deficit. “The state is ultimately forced to pick up a significant portion of the cost of living wage ordinances because the inflated wages increase the cost of local government, which in turn increases demand for state revenue sharing,” he said..

Previous Mackinac Center reports have studied the economic effects of living wage laws, and Center scholars have recommended that the Legislature consider preempting such laws. Kersey said, “In light of the likely costs to both poor families and taxpayers across the state, preemption of local living wage laws by the Michigan Legislature is an appropriate response.”

The living wage bill now goes to the full House for consideration. Michigan legislators have proposed 509 new laws in the first seven weeks of the current two-year session.

The Mackinac Center for Public Policy is a nonprofit, nonpartisan research and educational institute headquartered in Midland. Legislators’ complete voting records and descriptions and histories of all bills are available at MichiganVotes.org, a free public service of the Mackinac Center.