Why raising the minimum wage will have a positive impact on workers compensation benefits in Michigan.
The Michigan Legislature has passed a bill raising the minimum wage from $7.40 to $9.25. Governor Snyder has signed this legislation and increases will begin on September 1, 2014.
The minimum wage will gradually increase to $9.25 per hour by 2018. Future increases will be linked to the rate of inflation in other Midwestern states.
This is welcome news for low wage earners. It should also have a positive effect on workers compensation benefits across the state.
A disabled employee should receive 80% of his or her after-tax average weekly wage. However, this amount is capped at 90% of the state-wide average weekly wage.
The idea is to limit workers compensation benefits to what most employees in Michigan are actually being paid. This means high wage earners are stuck with an arbitrary maximum regardless of their income.
Increasing the minimum wage will result in a higher state-wide average weekly wage. This means potentiallyÂ greater workers compensation benefits even if a person’s salary has not increased.
How the math works
The 2014 maximum rate is $805.00 based on a state average weekly wage of $893.44. This results in $41,860.00 per year in total wage loss benefits. It does not matter if you are a professional football player or a neurosurgeon. You are stuck with this maximum rate.
Individuals with low paying jobs are in a worse position. Current minimum wage is $7.25 per hour. Working 40 hours per week would mean an average of $290.00. For a single person with no dependents, he or she would be entitled to $196.56 per week or $10,221.12 per year.
Michigan Workers Comp Lawyers never charges a fee to evaluate a case. We have represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation.
Photo courtesy of Creative Commons, by r-z.