Restaurant servers and bartenders across Michigan are bracing for a big hit to their income following a state Supreme Court ruling that will transition tipped workers to minimum wage beginning next year.

It could be a double-whammy if former President Donald Trump isn’t reelected in November, because currently restaurant workers pay taxes on tips. But Trump vowed in June that, if elected, he would eliminate taxes on tipped income.

“My tip averages 25%, sometimes more. But I think once everyone learns that we’re all on minimum wage, I don’t think they’ll tip the 20% anymore,” Tami Jo Schultz, a waitress at Hof Bar and Grill in Free Soil, told MLive. “I think it will be more like 5%, maybe 10%, if that.”

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The Michigan Supreme Court last week overruled legislative changes to a November 2018 ballot proposal that aimed to gradually raise the minimum wage to $12 an hour by 2022 and eliminate a lower wage for tipped workers that’s takes into account their extra earnings.

Republicans stripped the inclusion of tipped workers and delayed the minimum wage increase until 2030 in an “adopt-and-amend” strategy the Supreme Court ruled unconstitutional in a 4-3 vote on July 31.

While Saru Jayaraman, president of the One Fair Wage group that pushed the changes, contends the ruling was “a great day for the more than 484,000 workers in Michigan who are getting a raise,” Schultz and others are concerned about the roughly 125,000 tipped workers in hospitality who will pay the price.

The Michigan Restaurant and Lodging Association released a survey in June that found 66% of restaurant owners plan to lay off employees, while 20% expect to shut their doors permanently, because of the change. Another 42% plan to cut operating hours to compensate for the higher pay, while 92% of restaurants surveyed expect to hike prices by 20% to 25% by early 2025.

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“We’re in a rural area where people are just blue collar people, so now they might not eat out as much because of the costs of the menu,” said Schultz, who has worked in the industry for three decades. “For us in our area – we may be different from city ones – all the rest of your small mom-and-pops are going to have that same exact concern.

“Their livelihood is their regulars. They’re the ones that keep them going all year round, so the regulars that come in three times a week may now only come in once a week instead.”

Emma Caperton, a former server who now works for the 4GR8Food Group that owns multiple West Michigan restaurants, told MLive her friends still working as servers are already seeing the impact from the Supreme Court ruling.

“Just with the information about servers becoming hourly workers, they’ve already seen a dip in their tips because people are under the impression that they’re already being switched to minimum wage,” Caperton said. “They have already had a few people write on their bills ‘Good luck with hourly’ or whatever. That’s already seeming to affect my friends in their workplace.”

Paul Isely, economics professor at Grand Valley State University, predicts some patrons will still tip their servers once their wages increase, but not nearly as much.

“What is more common is that tips stay on, but the people who are buying the meals realize the workers are making more money in wages, so that affects their willingness to tip as much,” Isley said. “So it starts decreasing the tips. And in some cases, the decreases in tips is more than any increases in wages.

“There’s a lot of tipped workers who make substantially more than they would make if we were paying them salaries.”

If former President Donald Trump wins the presidential election in November, frustrations with the judicial pay cut could become a double-whammy.

Trump has repeatedly promised to eliminate taxes on tipped wages if he wins a second term, but the Supreme Court ruling eliminates that potential windfall.

“To those hotel workers and people who get tips, you are going to be very happy, because when I get to office we are going to not charge taxes on tips, people making tips,” Trump said at a June 9 rally in Nevada. “… We’re going to do that right away, first thing in office.”

Republicans in the Michigan Legislature, meanwhile, are calling on the Democratic majority to intervene to prevent widespread layoffs and restaurant closures, which many predict could hit rural areas the hardest.

“The Legislature must return to the Capitol immediately, because this decision will completely disrupt the livelihoods of hard-working Michiganders,” said House Minority Leader Matt Hall, R-Richland Township. “Restaurants and other small businesses will have to raise their prices, tipped workers will take home less pay, and some people will lose their jobs. The court has ruled, and now it’s time for the people’s representatives to take action.”

If lawmakers don’t reinstate the tipped wage before the change takes effect on Feb. 21, the MRLA, Chamber of Commerce, and others are predicting the fallout will be “catastrophic,” resulting in the loss of 40,000 to 60,000 jobs in an industry still reeling from Gov. Gretchen Whitmer’s pandemic edicts.

“The alternative is a pandemic-level of restaurant closure and job loss, which will decimate Michigan’s second largest employer, wreaking havoc on Michigan’s overall economy,” MRLA CEO Justin Winslow said in June.

“It’s difficult to imagine how our state’s restaurants and hospitality establishments will absorb this large of an increase in their labor costs or how employers will make the required sweeping and costly changes to their leave policies without cutting back elsewhere,” Wendy Block, senior vice president of business advocacy for the Michigan Chamber of Commerce, said in a statement.