Last week, while waiting for my latte at my favorite café, I noticed the owner tapping away at the register. When I asked what was on his mind, he said he was calculating labor costs for next year.

That's right, Michigan's minimum wage will increase to $15 per hour starting January 1, 2027. It's been exactly one year since it rose to $13.73 in January.

This isn't sudden news; it was already scheduled in a state law amended in early 2025. The official page of the Department of Labor and Economic Opportunity (LEO) also confirms the $15 minimum wage for 2027.

In numbers, that's an increase of $1.27 per hour, which is a 9.25% rise. At first, it seemed like just over a dollar, but when I calculated it, my perspective changed.

For a 40-hour work week and 52 weeks a year, that means an additional $2,641.60 per employee annually. With the payroll taxes that employers have to pay, the actual burden is a bit higher.

If you have a small shop with five employees, that's over $10,000 a year. I instantly understood why the café owner's expression was like that.

Restaurant owners also need to consider the hourly wage for tipped employees. The minimum wage for tipped employees is set as a percentage of the regular minimum wage, which is 40% this year, making it $5.49.

Starting in January, this percentage will increase to 42%, raising the wage to $6.30. It is also set to increase by 2 percentage points each year until it reaches 50% in 2031.

One important thing to remember is that if the combined amount of tips and base wage falls short of the regular minimum wage of $15, the employer must make up the difference.

Employers must also inform employees in writing about the application of tip credits. In busy establishments, it's easy to overlook such paperwork, so it would be wise to take care of it before the end of the year.

If you employ many student workers, be sure to check the regulations for minors. Those under 18 can be paid up to 85% of the minimum wage, which will be $12.75 next year.

There is also a provision that allows new employees under 20 to receive a training wage of $4.25 per hour for the first 90 days. However, be sure to confirm the conditions with the state government guidance before actually using it.

Equally important as the minimum wage is paid sick leave. Michigan's Paid Sick Leave Act (ESTA) currently applies to virtually all businesses.

Employees earn one hour of sick leave for every 30 hours worked. Businesses with fewer than 10 employees must provide at least 40 hours of sick leave per year, while larger businesses must provide up to 72 hours.

Sick leave hours are paid at the same rate, so when the hourly wage increases, the cost of sick leave also rises. If this isn't accounted for in next year's budget, the calculations will be off.

So what should you do now? If I were running a business, I would first lay out a wage chart for each employee and mark those earning below $15.

Next, I would look at employees who were originally earning around $15. If a new hire suddenly earns the same as existing employees, it can lead to feelings of unfairness.

Therefore, I believe it's good to leave even a small difference for those who have been with the company longer. Even if it's not a lot of money, that difference often helps retain employees.

Make sure to adjust your payroll system so that the new wage takes effect from the first shift after January 1. This is an easy detail to overlook after the holiday rush.

It's also a good idea to inform employees in advance. Sharing the schedule and the changes in wages now builds trust, rather than them finding out after receiving the January pay stub.

It might be worth reviewing the work schedule as well. By slightly adjusting staffing during slower hours, you can offset some of the increased labor costs.

Make sure to post the new minimum wage poster in a visible area for employees. You can obtain it for free from the LEO website.

Whether to raise menu prices or service fees depends on each business's situation. Many owners choose to adjust just a few popular items rather than making a large increase all at once.

Honestly, as someone who works alone, this feels very relevant to me. I know how much consideration goes into raising prices with suppliers.

Still, I believe this increase is a step in the right direction. Given the current grocery prices, it's not easy to get by on a $13 hourly wage for a month.

However, it's unfortunate that small businesses are left to shoulder this burden alone. I hope there will be support for small businesses or tax benefits to accompany this change.

Starting in 2028, the wage will be adjusted annually based on inflation, so preparing this year will make things much easier in the future. Since the exact application varies by business situation, be sure to check with an accountant or labor expert.

As I left the café, I noticed the leaves on the street trees had already turned orange. By the time the first snow falls, the new wage schedule will be in effect.

The next time I go for a latte, I plan to ask the owner if he finished his calculations. I sincerely hope our local businesses make it through this winter safely.