State lawmakers last week reached an 11th-hour deal to preserve a lower minimum wage for workers who earn tips. Why it matters: The agreement satisfied restaurant owners opposed to paying planned wage hikes and settled a years-long battle over how much the minimum wage will increase in the coming years.

Some states have a tipped minimum wage equal to the minimum wage. That includes Washington, the state with the highest tipped wage in the nation at $16.66. On the other end, the federal government mandates states pay at least $2.13 per hour to tipped employees. So there are 16 states tied for the lowest tipped wage at $2.13.

More than six years ago, committees gathered enough petition signatures to put minimum wage and sick leave proposals on the ballot in November 2018. However, Republican lawmakers adopted the measures before Election Day, keeping them off the ballot, and then returned after Election Day to significantly weaken the requirements.

The tip credit, or subminimum wage, was expected to increase to 48% of the minimum wage on Feb. 21, 2025, continue to increase, and then be phased out completely by Feb. 21, 2029. The laws Whitmer signed made it so the subminimum wage remained at 38% and will instead increase by 2% each year through Jan. 1, 2031, when it will reach 50%.

As part of a phased-in increase, the state's minimum wage will eventually increase to $15 an hour in the coming years.

Governor Gretchen Whitmer signed into law two bills amending the state’s Wage Act and Earned Sick Time Act (ESTA).