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TIPS By NICK PELTON Capital News Service LANSING – Many restaurant owners are worried about a union-backed proposal to almost double the minimum wage for tipped workers. “It’s going to help nothing,” said Andy Deloney, director of public affairs for the Michigan Restaurant Association. “We’re fighting this, talking to legislators.” Currently, tipped workers get a minimum of $2.65 an hour, and tips account for the rest of their income. A pending bill would increase their base pay to $4.65 by July 1, and to $4.90 a year later. The bill would boost the tipped minimum by the same amount as the minimum wage increase last year for other workers, said co-sponsor Fred Miller, D- Mount Clemens. “It’s about bottom-up economic stimulus for working families,” he said. "I think the bottom line is it's a matter of fairness," said Ken Fletcher, legislative director of the AFL-CIO, which backs the proposal. "$2.65 is a ridiculous wage that no one can live on." Miller, who chairs the House Labor Committee, said that Gov. Jennifer Granholm supported a similar increase last year. Deloney said the proposed hike would cause problems for the restaurant industry. Many large and small restaurant owners have complained about the potential cost, he said. As an example, the owner of one owner of a small, independent restaurant would face a $60,000-a-year increase in payroll costs, Deloney said. “Stories like that are all over the state.” The legislation would lead to layoffs and price increases and would slow down growth plans, he predicted. But Fletcher of the AFL-CIO said higher wages would make their way back into the economy as tipped employees spend more. "That money gets turned around very quickly." Not all restaurant owners see the proposal as a huge worry. For example, Douglas Kulmacz, who owns Hillcrest Family Restaurant in Cadillac, said he wouldn’t have to raise prices or layoff staff. “It would be a concern, but not a major concern,” he said, adding, “We suffered through the last minimum wage increase.” Kulmacz said most of his wait staff already earns more than the current minimum. “They’re the best-paid employees in the restaurant.” Miller said servers and bartenders aren’t the only workers who get tips. The casino industry, which is expanding in Michigan, also has many tipped employees. Deloney said, Technically, tipped employees must make at least the minimum wage like any other employees. If their tips aren’t enough to bring their hourly rate to the minimum wage, their employers must make up the difference. "Every employee in the state is guaranteed a minimum wage,” he said. But Fletcher said that doesn’t always happen because workers often share tips, and some employees fall through the cracks of the system so their actual pay falls below the minimum. "The end result is that they bring home a poverty-level income," he said. "They need at least an increase." In 2006, Michigan’s minimum wage rose by $1.80 to $6.95 per hour. It will increase again to $7.15 on July 1, and to $7.40 next year. The bill has been referred to the House Labor Committee.
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