Written by Molly Amrine
For much of American history, there has been a recurring debate over whether more power should be vested in the federal government or state governments. This dispute has permeated the space of labor law, with the omnipresent question of not only how much the minimum wage should be raised, but who should raise it. While most people might think that this is a binary decision between state and federal government, there is actually a third player legislating on this issue in many states—and losing the power to do so in others. In 25 U.S. States, local governments have the power to determine their own minimum wage as long as it is not lower than that set by federal or state law. In the other 25 states, restrictive laws known as wage preemption have been passed—taking this legislative power away from localities (“Workers’ rights preemption…,” 2019). The general practice of preemption can include any taking away of legislative discretion from smaller governments and giving it solely to larger governments such as states, however, this kind of policy is especially common when concerning labor law in the United States (Cornell Law School, n.d.).
In an example of one of these restrictive laws, Michigan’s “Local Government Labor Regulatory Limitation Act,” (Public Act 105)—passed in 2015—limits localities and municipalities’ ability to legislate on various labor-law issues. Michigan’s Public Act 105—a fairly standard example of preemption—is especially concerning as a policy given its one-size-fits-all approach to the diverse economic makeup of Michigan. While legislative decisions on issues such as leave time and fringe benefits (which are bonus perks such as healthcare) are all removed from localities’ discretion in this act, most of the infringement on local autonomy comes from its enactment of wage preemption. Due to the diverse economic makeup of the state, as well as the harmful effects that wage preemption has on specifically workers and minorities, Public Act 105 is a poorly designed piece of legislation that does not serve to benefit the residents of Michigan.
As of January 1, 2023, the minimum wage for the entire state of Michigan, as mandated by Public Act 105, is $10.10—despite extensive disparities in the cost of living between regions across the state (“Michigan Minimum Wage…,”, 2022). This wage standardization is inappropriate because the state of Michigan has diverse localities each with unique needs. For example, urban dwellers spend more money than rural residents due to the greater average cost of living in populous cities. The US Bureau of Labor Statistics (2016) found that, on average, an urban household spends approximately 27% more than a rural household in any given month. Living in Michigan’s cities is costlier than in Michigan’s countryside, but wages do not compensate for this differential. Despite Michigan as a whole having prices 6% lower than the national average—according to the US Bureau of Economic Analysis (2022)—prices vary greatly within the state itself. MIT’s Living Wage calculator demonstrates these price inconsistencies when comparing different regions of Michigan through the compilation of day-to-day costs such as food, child care, medical expenses, housing costs, and more (Massachusetts Institute of Technology, n.d.).
This calculator finds that in generally higher-cost areas such as Oakland County outside of Detroit, a typical family with two working parents and two children is estimated to require a living wage of $30.07 per provider. Contrastingly, in a more rural area such as Ontonagon County in the Upper Peninsula of Michigan, the living wage for this same family unit would be $22.59 per provider. While a roughly $8 wage differential may seem insignificant, these disparities add up to create very different wage needs across the state.
Beyond this difference in cost of living, the MIT Living Wage calculator also demonstrates the nearly universal insufficiency of the prevailing Michigan minimum wage. Even for a single adult with no children, there is no county in Michigan in which $10.10 is a sufficient living wage (the living wage varies based on area and household size). In many instances, this wage for a single parent would even qualify as below a poverty wage (which also varies based on area and household). The coalescence of widespread gaps in the cost of living and pervasive unaffordability across Michigan creates an environment that is especially vulnerable to the damaging effects of wage preemption.
Further, already marginalized groups bear the brunt of this damage, as the ill effects of these sub-optimal wage rates inflicted on localities under preemption legislation fall primarily on minority and working populations. The National Employment Law Project, in studying 12 counties and cities where preemption laws overturned existing local minimum wage laws, found that wage preemption impacted nearly 346,000 workers—each saw an average loss of $4,100 per year (Huizar and Lathrop, 2019). Overall, these losses are costing workers approximately $1.5 billion annually. This is certainly no small loss for both the average American worker as well as the overall American economy. Moreover, this study found that these ill effects of wage preemption primarily impact women and workers of color—with women making up the majority of those heavily affected in all but two cities and workers of color making up substantial shares in all but three cities. On the whole, areas with wage preemption see poverty rates much higher than the current US level, with 14.6% of those living in areas impacted by preemption in poverty compared to the national poverty rate of 10.5% (Congressional Research Service, 2022).
This greater inequality created by preempted wages renders this form of policy bluntly ineffective at creating the equitable minimum-wage system it aims for through a one-size-fits-all mentality. Many states, such as Colorado and Arizona, have moved beyond simply observing a similar inadequacy of their state preemption laws, however, and have gone on to overturn their own previous forms of wage preemption. In Colorado, wage preemption was adopted in 1999 and subsequently repealed in 2019 (“Colorado Legislature Approves…,” 2019). Despite overall rising wage rates in Colorado, disproportionately high cost-of-living cities such as Boulder and Denver sparked the legislature to repeal their ban on localities setting their own minimum wage. With numerous other states nationwide now beginning to reflect on the impact of their own preemption laws, others may follow this precedent set in Colorado.
Despite preemption advocates’ argument that preemption makes laws more consistent (as opposed to a “patchwork” of laws from many localities), the root of support for legislation such as wage preemption lies in traditionally business-centric motives to curb rising wages in high-cost urban areas (“Fighting Labor Policy…,” 2022). Further, a “patchwork” of legislation may be best in states such as Michigan where the socioeconomic landscape is diverse and a one-size-fits-all approach is likely not best suited.
Moving forward, as preemption likely becomes more of a widespread topic of debate amidst nationwide efforts to overturn it, legislation such as Michigan’s Public Act 105 may be more overtly called into question. Given the current primarily democratic make-up of the Michigan legislature—as of 2023—traditionally democratic anti-preemption advocates will need to put increasing pressure on their representatives in order to inspire this shift toward greater local power and worker prioritization (Smith, 2023).
Other states have begun to make a change toward more equitable labor law and it is time that Michigan follows suit. In a state with a vastly diverse socioeconomic makeup, laws that treat all areas and residents as homogenous are unreasonable. Preemption as a whole may be a broad issue to tackle, but first challenging Michigan’s Public Act 105 is a start to making a change toward the equitable state law of Michigan’s future.
References
Colorado Legislature approves landmark bill to repeal preemption of Local Minimum Wage Laws. National Employment Law Project. (2019, May 3). Retrieved March 5, 2023, from https://www.nelp.org/news-releases/colorado-legislature-approves-landmark-bill-repeal-preemption-local-minimum-wage-laws/
Congressional Research Service. (2022, February 10). Poverty in the United States in 2020. Retrieved March 5, 2023 from https://crsreports.congress.gov/product/pdf/R/R47030#:~:text=Under%20the%20Census%20Bureau%27s%20official,million%20(10.5%25)%20in%202019
Cornell Law School. (n.d.). Preemption. Legal Information Institute. Retrieved March 5, 2023, from https://www.law.cornell.edu/wex/preemption
Eliason, K. (2021). Unsplash. Retrieved March 20, 2023, from https://unsplash.com/photos/maJDOJSmMoo
Fighting labor policy preemption that undermines local power and the democratic process. National Employment Law Project. (2022, October 27). Retrieved March 5, 2023, from https://www.nelp.org/publication/fighting-labor-policy-preemption-that-undermines-local-power-and-the-democratic-process/
Huizar, L., & Lathrop, Y. (2019, December 3). Fighting wage preemption. National Employment Law Project. Retrieved March 5, 2023, from https://www.nelp.org/publication/fighting-wage-preemption/
Local Government Labor Regulatory Limitation Act, Pub. L. No. 105. (2015). http://www.legislature.mi.gov/(S(mffvhoe4km02q4wqadmzbwqn))/documents/mcl/pdf/mcl-Act-105-of-2015.pdf
Massachusetts Institute of Technology. (n.d.). Counties and Metropolitan Statistical Areas in Michigan. Living Wage Calculator. Retrieved March 5, 2023, from https://livingwage.mit.edu/states/26/locations
Michigan minimum wage set to increase on January 1 2023. Labor and Economic Opportunity. (2022, December 5). Retrieved March 5, 2023, from https://www.michigan.gov/leo/news/2022/12/05/michigan-minimum-wage-set-to-increase-on-january-1-2023#:~:text=LANSING%2C%20Mich
Smith, M. (2023, January 18). Statehouse Democrats embrace an unfamiliar reality: Full power. The New York Times. Retrieved March 5, 2023, from https://www.nytimes.com/2023/01/18/us/democrats-michigan-minnesota-maryland.html
U.S. Bureau of Economic Analysis. (2022, December 15). Real Personal Consumption Expenditures by State and Real Personal Income by State and Metropolitan Area. U.S. Bureau of Economic Analysis. Retrieved March 5, 2023, from https://www.bea.gov/news/2022/real-personal-consumption-expenditures-state-and-real-personal-income-state-and
U.S. Bureau of Labor Statistics. (2016, October 28). Urban and rural household spending in 2015. U.S. Bureau of Labor Statistics. Retrieved March 5, 2023, from https://www.bls.gov/opub/ted/2016/urban-and-rural-household-spending-in-2015.htm
Workers’ rights preemption in the U.S.: A map of the campaign to suppress workers’ rights in the States. Economic Policy Institute. (2019, August). Retrieved March 19, 2023, from https://www.epi.org/preemption-map/