The Chicago City Council recently voted to remove the tipped minimum wage, marking a major win for workers’ rights advocates in the market.
Currently, the city’s tipped minimum wage is $9.48, with gratuities making up the difference to the $15.80 minimum wage. As part of the new law, the tipped minimum wage will annually increase by 8 percent until 2028, meaning restaurant operators have five years to prep for its elimination.
The City Council approved the measure 36-10. Other places that have eliminated the tipped minimum wage are California, Alaska, Minnesota, Montana, Nevada, Oregon, and Washington.
“This ordinance embodies Chicago’s values of uplifting working people and addressing systemic inequities in the restaurant and hospitality industry, which in turn will create a better economic future for tipped workers and our city,” Chicago Mayor Brandon Johnson said after the vote, according to the Chicago Sun-Times.
One Fair Wage—an organization that strongly advocated for the change—said the tipped minimum wage impacts nearly 100,000 Chicago-based workers. Forty-four percent of those are women and 55 percent are people of color.
A University of Illinois Urbana-Champaign study from last summer collected surveys from 1,024 tipped workers in Chicago and found that fewer than 7 percent earned more than the minimum wage of $15.40 before tips and just over 16 percent earned less than the tipped minimum wage of $9.24 before tips. Nearly 57 percent reported they were illegally required to “tip out” their managers in the week prior to survey participation.
“For anyone who’s worked in a restaurant, bar or cafe, you have a pretty good idea of how the practice of tipping can lead to discriminatory practices—and how it oftentimes has much less to do with your ability to actually do your job well than your ability to withstand certain types of abusive behavior from customers,” Alison Dickson, the study’s lead author, said in a statement.
The Illinois Restaurant Association isn’t happy about the law but agreed to a compromise after the original bill proposed to eliminate the tipped minimum wage in two years. The Association surveyed 315 Chicago restaurant operators and found that 92 percent said menu prices will increase, 75 percent thought tipped employees will see less pay, 77 percent foresaw a “very negative” impact on operations, and 66 percent said they will have to reduce staff. As of now, the median full-service restaurant tipped worker in Illinois makes $28.48 per hour.
The Association also used research from Seattle and San Francisco—two other cities that removed the tipped minimum wage—and discovered that workers with higher tipped minimum wages do not make more in total hourly wages and that for every $1 the minimum wage went up in San Francisco, the likelihood of a median-rated restaurant closing increased 14 percent.
Association president Sam Toia described the law as imperfect, but noted that it was the best way for the industry to move forward given the circumstances from both sides.
“While we wholeheartedly disagree with the decision to move forward with the elimination of the tip credit, we do believe the amended 5-year phase-in plan is a compromise we can accept and represents a middle ground between what our members want and the City’s legislative priorities,” Toia said in a statement. “Change is always difficult, and we have fought such proposals for years; however, negotiations require concessions by both sides to come to a resolution, and this ordinance is the result of an open dialogue between our organization, the Mayor’s office, and members of the Chicago City Council.”
