LANSING, Mich. — Workers throughout Michigan are poised for a raise Oct. 1 when the state’s minimum wage increases from $5.15 to $6.95 an hour.

But West Michigan dairy farmer Jack Jeppesen isn’t singing the praises of the bill’s supporters.

Jeppesen is just one of Michigan’s farm owners who will see an increase in his payroll after Gov. Jennifer Granholm signed legislation on March 28 boosting the state’s minimum wage for the first time in nine years.

Granholm said the new law should help strengthen the state’s economy by giving low-income workers more money to spend.

Even though Jeppesen said he understands that agricultural producers are exempt from the wage hike, he said his family’s Black Locust Farm will have to increase the wages of some of its employees to keep them.

“You stop and think about it. How can I not raise it when kids can go to the movie place and make more and they won’t have to work here anymore?” Jeppesen said.

“We pay our employees more than minimum wage, but it’s not what the new minimum wage will be,” he said. “It’s going to affect us. We don’t want to pay below the minimum wage. With the margins as low as they are in agriculture you have to save money.”

Jeppesen, who farms in a partnership with his brother, Tom, on a third-generation dairy farm in Montcalm County’s Douglas Township, said the wage hike is only one of his concerns. In addition, he said the farm will have to budget for increased workman’s compensation costs, which are based on an employee’s pay, as well as higher matches for federal and state tax withholdings.

“Milk prices are expected to drop in April, May and June,” he said. “We have to look at where to pinch pennies. Our margins are pretty small.”

Following the initial wage hike, the legislation calls for the minimum hourly wage to raise to $7.15 per hour in July 2007 and to $7.40 in July 2008.

The issue was being pushed by the Michigan Needs a Raise coalition – a special interest group that includes labor unions, the Michigan Democratic Party and other groups. The group was pursuing a ballot campaign, which would have allowed voters to decide the legislation’s fate.

However, the Republican-dominated state Legislature OK’d the wage hike in March when it became evident that a petition drive to put the issue before voters was headed toward success. If the measure had won the support of the majority of Michigan voters, it would have put the increase in the state constitution. The ballot proposal would have raised the wage to $6.95 per hour in January, and future increases would have been tied to the inflation rate.

State Rep. Judy Emmons, R-Sheridan, also owns and operates a dairy farm with her husband, Jerry. She voted no on the measure, but said it’s approval ultimately was the “lesser of two evils,” because if it had become part of the state’s constitution there would have been no end to how high the minimum wage would increase.

Jeppesen agreed, saying the issue was “a lose-lose situation.”

“Businesses are going to have to pass the cost along by raising their prices,” Jeppesen said. “If it was a constitutional amendment it would have gone up each year.”

“Every small business owner I’ve spoken with is going to have to cut back on help or pass it along by raising their prices,” Emmons said.

“As usual, with agriculture we have nowhere to pass it on because we are price takers,” she said. “It’s definitely going to have a ripple effect.

“It’s going to affect agriculture disproportionately. Those businesses we are purchasing from will pass on higher prices to us, but we have nowhere to pass it on to,” she said.

About 90,000 of Michigan’s 2.9 million workers were paid at or below minimum wage in 2004, according to state figures.

Thousands more make less than $6.95 an hour.

The minimum wage bill is Senate Bill 318.

This farm news was published in the April 5, 2006 issue of Farm World.