Hello Wallet Watch readers!
We’re back with our weekly recap of top business news here in Michigan. This past week’s headlines covered some of our most-read economic topics: wages, inflation and debt.
The federal government and local courts made moves that will have ripple effects on minimum wage, student debt relief and, potentially, egg prices.
Supermarket sweep
Inflation eased somewhat in December although still high at a year-over-year increase of 6.5%. Consumers are feeling the most pinched at the grocery store as the food at home index is up 11.8%.
Prices for all major food at home groups increased. Cereals and bakery products, dairy and nonalcoholic beverages all had double digit increases. But the price jump that is sticking out on everyone’s receipt is eggs.
Bureau of Labor Statistics data shows egg prices jumped nearly 60% from December 2021 to December 2022. And some costs have gone up even more with Grade A large eggs going from $1.79 to $4.25 a dozen.
Rose White, our resident egghead, has been following the price jump and trying to make sense of what’s behind the steep increase.
This week, the federal government got involved in the scramble when a senator asked the Federal Trade Commission to investigate potential price gouging by the country’s largest egg producers.
Sen. Jack Reed, D-Rhode Island along with advocacy group Farm Action raised concerns over “deceptive practices” and “collusive schemes.”
Here in Michigan, the Attorney General’s Office has gotten five complaints of possible egg price gouging in the past six months.
The experts, however, think the price gouging allegations are misplaced. As Rose reported last month, the price increase is a result of depleted supply due to a deadly run of avian flu last year.
A reported 43 million egg-laying hens last year died which decreased egg inventory by about 29%, according to the U.S. Department of Agriculture.
Regardless of the root cause, increased food prices have contributed to the increase in food scarcity.
Nearly 801,000 Michigan households, up from 705,000 households a year prior, reported not having enough to eat in December, according to a U.S. Census Bureau survey.
Rose’s reporting on Michigan food banks seeing in an increase in demand but a decrease in supply shows this gap is hitting the most vulnerable populations.
Grocery aid programs that were ushered in during the pandemic are drying up as well. Bridge cardholders in Michigan have been receiving an extra $95 to their monthly allowance since 2021 and increased funding since 2020.
Now those 1.3 million families will need to retool their grocery budgets as that extra $95 will end after the February allotment.
Debt relief impact in Michigan
New data shows the state-by-state impact of the proposed student debt relief plan from the Biden administration. That plan has been halted by legal challenges.
In Michigan, 566,000 borrowers were already approved for federal debt forgiveness.
About 864,000 Michiganders applied or were deemed automatically eligible for student loan forgiveness before courts halted the plan last year, according to White House data.
The U.S. Supreme Court is scheduled to hear oral arguments next month for two lawsuits targeting the student debt forgiveness program. If allowed to move forward, the U.S. Department of Education would forgive $10,000 per eligible student borrower and $20,000 per Pell Grant recipient.
As legal battles rage on the pause on student loan payments will continue until June 30.
Minimum and tipped wages won’t increase this month after all
Michigan minimum and tipped wage workers are also caught up in the court system.
A Court of Appeals decision reversed action on a wage increase that was set to go into effect in February. Restaurants were going to be legally obligated to raise minimum wages to $13.03 and $11.73 for tipped employees on Feb. 19.
The current state minimum wage is $10.10 and tipped wage is $3.84, and the Jan. 26 ruling keeps it that way.
This is the latest decision in an ongoing legal battle that spurred from a 2018 ballot initiative that sought to raise Michigan’s minimum wage to $12 an hour by 2022 and raise the minimum wage for tipped workers to 80% of the standard minimum wage in 2022, 90% in 2023 and ultimately match it in 2024.
What’s being debated in the courts has nothing to do with dollars and cents but whether or not the 2018 Legislature acted within its authority. After the ballot initiative passed the Legislature “adopted-and-amended” the proposal to establish lower wage thresholds and push increases to 2030, among other changes.
The most recent court decision determined the Legislature was constitutionally allowed to “adopt-and-amend” the proposal.
The case is expected to move forward to the Michigan Supreme Court.
Want to read more about the economy? See all our inflation coverage here.
This story is part of MLive’s Wallet Watch series focused on today’s economic issues. Have a Wallet Watch suggestion? Email us at askaquestion@mlive.com
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