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Senate Minority Leader Gretchen Whitmer and Senate Majority Leader Randy Richardville.

(AP Photo | Detroit News, Dale G. Young)

LANSING, MI -- Michigan's minimum wage would rise from $7.40 to $9.20 an hour for regular employees and from $2.65 to $3.50 an hour for tipped workers by 2017 under compromise legislation approved Thursday in the Michigan Senate.

Senate Bill 934, as introduced last week by Senate Majority Leader Randy Richardville (R-Monroe), would have raised the minimum wage to $8.15 an hour for most employees and to $2.93 for tipped employees.

The substitute bill, approved in a 24-14 vote with bipartisan support, would give workers a bigger raise and index the rate to inflation, allowing it to rise again in years where unemployment is low.

The legislation would repeal the state's current minimum wage law, undermining an ongoing petition drive seeking to raise the rate to $10.10 an hour for all employees.

Business groups argued the potential ballot question would hurt job creators and cripple the restaurant industry. Richardville and some other Senate Republicans ended up backing a smaller minimum wage increase they had previously opposed.

"The people that started this ballot proposal got the attention of a lot of people out there," Richardville told reporters after the vote. "And while they may have been well-intentioned, I think they went too far. It wasn't something we could amend or change, so instead, we replaced it."

Senate Minority Leader Gretchen Whitmer (D-East Lansing) pushed for many of the changes in the substitute bill. She was not thrilled, according to a spokesperson, but believed the GOP was going to "kill the ballot drive" one way or another.

"Michigan’s minimum wage workers deserve solutions from their elected officials, not political games, and I'm pleased we were able to deliver that to them today," Whitmer said in a statement.

"This bill is substantially better than the bill introduced and provides a meaningful raise to countless workers that will continue into the future, and I am proud of that."

Michigan's $7.40 an hour minimum wage is already higher than the federal rate of $7.25. Under Richardville's substitute bill, the wage would rise to $8.15 in September, $8.50 in January, $8.85 in 2016 and $9.20 in 2017.

After that, the Department of Licensing and Regulatory Affairs would calculate the rate each October based on a Detroit consumer price index prepared by the U.S. Bureau of Labor Statistics. The minimum wage could only rise in years where the unemployment rate remained below 10 percent.

Democratic gubernatorial hopeful Mark Schauer was on hand for the vote, praising the compromise legislation and noting that it was strikingly similar to the $9.25 an hour minimum wage he proposed last year. He shook hands with Richardville and encouraged Republican Gov. Rick Snyder to "lead" on the issue.

"$7.40 an hour is a poverty wage," Schauer said. "$8.15 introduced last week is a poverty wage. This is a significant increase, and I think what's especially meaningful is this Senate version, as mine was, is indexed to inflation so the minimum wage doesn't lose its purchasing power. This is a good bill."

Not everyone was excited about the compromise legislation. Frank Houston of the Raise Michigan coalition said the bill does not go far enough and would not achieve the objectives of the petition drive, which will continue.

"We find this bill to be inadequate," Houston said. "Our goals were to lift people out of poverty and give them a meaningful increase. If you're not above $9.50, you're not really making a living wage."

Sen. Patrick Colbeck (R-Canton) spoke out against the legislation on the floor, arguing that increasing the minimum wage would increase the unemployment rate and reminding his colleagues he was elected to focus on job growth.

"This is bad news for the state of Michigan," Colbeck said.

Senate Bill 934 now heads to the House for consideration.

Jonathan Oosting is a Capitol reporter for MLive Media Group. Email him, find him on Facebook or follow him on Twitter

