UPDATE: This story has been updated to reflect the proposal passed and details about the proposal.
Tipped workers in Chicago are on their way to being paid at least the same minimum wage that non-tipped workers receive after Chicago City Council members approved legislation Friday.
A compromise struck between Mayor Brandon Johnson’s administration, the Illinois Restaurant Association and progressive alderpersons allows employers to phase out the subminimum wage, which allows tipped workers, like restaurant servers, to get paid less than minimum wage before tips.
Businesses now have five years to eventually pay their tipped employees the minimum wage by July 1, 2028 — rather than the two years that was originally proposed.
Here’s what we know about the plan.
What’s the current minimum wage for Chicago tipped workers?
Currently, tipped workers’ base pay — $9 to $9.48 per hour depending on the size of their employer — is 60% of the $15 to $15.80 an hour their non-tipped counterparts make. Employers are supposed to make up the difference if a worker’s tips do not bring them to the minimum wage, but workers and advocates have said that most employers don’t, and employees are hard-pressed to complain over fears of losing their jobs.
How much money would Chicago tipped workers make once this goes into effect?
The proposal passed Friday in a 36 to 10 vote requires employers to increase tipped workers wages by 8% annually, according to the ordinance, with tipped workers earning the full minimum wage by July 1, 2028.
“Tips is not going to help me,” Angela Miller, who said she has been a tipped worker for over a decade, said at a committee hearing last month. “I need my $15 an hour. I really do.”
Will Chicago restaurant workers make more — or less?
A report issued last month by University of Illinois and University of Chicago researchers, concluded, “that a modest increase in the tipped worker minimum wage is likely to lead to increased wages for tipped workers without meaningful negative employment effects.”
By standardizing minimum wage pay, the proposal is also intended to cut down financial abuse many restaurant workers say they have been subjected to.
A survey conducted by the Project for Middle Class Renewal at the University of Illinois of roughly 1,200 Chicago tipped workers in July 2022, found that nearly 57 percent of those surveyed said they were required to illegally “tip-out” their managers in the week prior, more than 43% said they faced at least one form of illegal discrimination on the job in the prior year and approximately 43% reported experiencing homelessness for at least one night in the past year.
“We shouldn’t treat the people who serve us like servants,” Ald. Desmon Yancy, 5th Ward said last month.
According to the survey, the average weekly take-home of tips was $186, and the median hourly wage before tips was $12.
But, it remains to be seen how Chicago restaurants might adapt to the ordinance. The Illinois Restaurant Association previously warned based on a survey of restaurants that an increased minimum wage would prompt businesses to raise menu prices and cut staff.
How do other U.S. cities pay their restaurant workers?
Chicago will be joining cities like Washington D.C., whose voters approved a ballot measure last year to phase out their subminimum wage by 2027. Many restaurants began adding service charges or raising menu prices as a result, according to The Washington Post.
But Saru Jayaraman, the president of the group One Fair Wage that’s campaigning to raise the subminimum wage, said thousands of workers have also left neighboring Maryland counties to work in Washington D.C.
“What people need right now is staff … and we are seeing – not businesses go across the border – we’re seeing workers go across the border to where they can get higher wages,” Jayaraman said last month.
According to the Department of Labor, eight states and territories already mandate that tipped employees receive the full minimum wage before tips: Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington and Guam.
Who was opposed to raising the minimum wage for Chicago’s tipped workers and why?
Those in opposition to it predicted costs would be passed onto customers and that businesses would choose to remain or go to nearby suburbs to avoid the increased wages.
“I think this is going to be a job and business killer,” Ald. Nick Sposato, 38th Ward, said last month.
Not all tipped workers are on board with the legislation. Several testifying before a City Council committee last month said they were torn. Wages need to rise, but they worry tips will be eliminated as a result.
Destiny Fox, said she is able to make more than the minimum wage through the tips she earns working at Gene & Georgetti, a steakhouse restaurant in River North.
“I don’t agree with making a one, flat wage and taking away my tips,” Fox said last month. “I live downtown thanks to the tips that I make. I work hard for my tips. We create experiences for people.”
Wendy Pollack, the director of the Women’s Law and Policy Initiative at the Shriver Center on Poverty Law, stressed that the bill’s intent isn’t to make tips go away.
“It’s tips on top,” Pollack said last month.
Sam Toia, the president and CEO of the Illinois Restaurant Association, said he disagrees with the city’s move to eliminate the tipped wage, but that the five-year compromise will give the restaurant industry time to adjust to the new reality.
“Change is always difficult, but negotiating requires concessions on both sides to find a solution,” Toia said last month.
Why is the Chicago City Council taking up subminimum wage now?
Eliminating the so-called subminimum wage was a goal Johnson campaigned on.
Under Johnson, the Chicago City Council this fall is taking up a lot of issues that progressives have been lobbying for years. Some of those council members say this is simply an issue worth fighting for.
“I have spoken with so many workers on the margins,” Ald. Carlos Ramirez-Rosa, 35th Ward , one of the ordinance’s sponsors and Johnson’s floor leader, said at a committee hearing last month. “Undocumented people who are afraid to report their employer for wage theft, who have been threatened I.C.E. being called on them … This is why we’re fighting for this issue.”
WBEZ’s Tessa Weinberg covers Chicago government and politics.