Posted on 01/08/2026 1:03:21 PM PST by nickcarraway
At $13.73 an hour, Michigan’s minimum wage jumped on Jan. 1 to the highest it’s ever been.
That shouldn’t be a surprise, given the state’s minimum wage has only stagnated or increased every year.
The question is: Does that mean today’s lowest earners also have more purchasing power than minimum wage workers from the past 61 years?
With some caveats, the new minimum wage is the highest it’s ever been, even after being adjusted for inflation, since Michigan implemented a state minimum wage in 1965.
The previous high was 1979. While minimum wage was only $2.90 an hour, that equates to roughly $13.60 in 2025 dollars.
On the flip side, minimum wage workers in 2005 had the lowest buying power. The $5.15 an hour wage in 2005 equates to $8.65 in today’s dollars, when adjusted for inflation.
The wage from 1996 would have been lower ($3.35 per hour at the time, $6.95 in today’s dollars), however the federal minimum wage took precedence over Michigan’s rate that year, since it was higher.
Check out the chart, below, showing the Michigan minimum wage by year and what it equates to in today’s dollars.
On average, the state’s minimum wage in today’s dollars has hovered around $10 to $11 an hour since it was implemented in 1965, said Paul Isely, associate dean and professor of economics at Grand Valley State University’s Seidman College of Business.
MLive used the federal Consumer Price Index’s latest figures from November 2025 to calculate the inflation-adjusted wage.
The CPI has some shortcomings when calculating real wage for Michigan, as it’s a national look at inflation facing urban households and doesn’t account for every good and service.
Since the ’60s, Michigan’s inflation has also trended lower than the national average, Isely said.
It’s still a good indication that the state’s minimum wage is close to or has surpassed its highest ever peak in terms of purchasing power, Isely said.
But it might not feel like it, he added.
“There is really strong purchasing power at this point in time for each dollar that’s being earned, historically,” Isely said. “Now, the trick is, people’s consumption patterns have changed as well. So people will likely feel worse off now than they did before because they’ve reset to higher consumption patterns than what they had in the ’70s and ’80s. And so their expectations are different. That affects things a little bit.”
People are buying more goods and services than they did before the pandemic, Isely said.
During the pandemic, people didn’t spend as much money because of lockdowns. Coming out of the pandemic, people had a desire to spend the money they saved up.
That higher level of consuming goods and services hasn’t diminished, he said.
“What’s interesting about that is it appears to have reset what people perceive as the amount of consumption they want to do to a higher level,” Isely said. “So even though people’s wages over the last eight years have outpaced inflation, people don’t feel like it has because they can’t meet the consumption that they want.”
The Consumer Price Index is a look at the “basket of goods” people buy and how the price for that total of goods and services has increased or decreased over time for the average urban resident. That basket represents everyday items like housing, transportation, groceries, clothes, health care, recreation, education and other goods and services.
While current minimum wage earners may have more purchasing power overall, a few items have outpaced inflation and wage growth.
Housing, health care and education are among the examples, Isely said.
Rather than guessing whether minimum wage workers felt better off in the past, Isely suggested looking at more recent history.
“In some ways we should ask, ‘Are you better today than you were last year?’” he said. “And unambiguously, adjusted for inflation, the wage increase that they’re seeing this year means they’re better off this year than they were last year.”
Michigan’s minimum wage is set to continue increasing, next to $15 in 2027 and then based on inflation every year after.
Before a successful legal challenge in 2024 that ushered in that change, Michigan’s minimum wage was supposed to be $10.80 an hour in 2026.
That dollar amount stems from the Republican-controlled Legislature’s 2018 decision to adopt and subsequently gut a proposed ballot initiative that would have raised the minimum wage to $12 in 2022 and then increased it annually based on inflation.
Advocates argued the state’s minimum wage was not providing the lowest earners with a livable wage.
Instead of letting voters decide, the Legislature adopted the initiative, but amended it to slow increases, reaching $12.05 by 2031.
In 2024, the Michigan Supreme Court ruled the “adopt and amend” tactic was unconstitutional and required the state to implement the ballot initiative as written, but adjusted for inflation. That would’ve seen the minimum wage reach $14.97 in 2028.
Other changes stemming from that ruling included getting rid of the subminimum wage for tipped workers, requiring instead that these workers earn full minimum wage as base pay.
Currently, the base pay for tipped workers is 40% of the minimum wage. If a tipped worker’s base pay plus tips doesn’t add up to the minimum wage, their employer makes up the difference.
Last year, the state’s divided Legislature in a last-minute compromise passed the Improved Workforce Opportunity Wage Act to amend the changes from the Supreme Court ruling.
The Act expedited the minimum wage hike to $15 by one year, but increased and capped the percentage of minimum wage that servers earn to 50%.
....And.. Let the lay offs and downsizing begin!
Incentivizing innovation. Those most impacted negatively are the ones whom the virtue signalers believe they’re helping.
1974 16 YO, working part-time at a Texaco station in Southern Michigan for $0.75/hr.
All UAW workers get the equivalent percentage jump in their paychecks.
Contract.
Jeez, you were getting screwed, In 1974 I was working at Taco Bell for $1.40/hr.
P.S.....Northern Ind.
The unions also push for higher minimum wages, as their wages are based on the minimum wage. Going from $10 to $15 minimum wage translates into going from $50 to $75 for some union jobs (or higher).
Oops - that’s what you said! (My reading comprehension is poor today!).
The minimum wage is a bad idea. Justifiable only in areas where the demand for labor is monopolistic, as in 1800’s company towns. Even there, unionization was the better solution.
1/1 Booyah! I got a raise!
Next pay day, WTF? I make less than before my raise!
Taxes 😤
First real job.
I didn’t care how much it paid.
It was at a service station and I could tweak my 72 Chevelle SS in the off hours.
Good times
The previous high was 1979. While minimum wage was only $2.90 an hour, that equates to roughly $13.60 in 2025 dollars.
_________________
If I remember right, 1979 happen during the end of Jimmy Carter disastrous reign. That minimum wage was pretty high even then and likely contributed to the crisis!
President Reagan put stop to that madness!
1/1 Booyah! I got a raise! Next pay day, WTF?
Taxes
This is closer to reality.
1/1 Booyah! I got a raise! Next pay day, WTF? I just got laid off/fired
company moving out of state.
Just in time for AI and new robotic replacements.
I say let people get as money as possible before AI wipes out jobs.
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