Chicago City Council votes to phase out subminimum wage for tipped workers
CHICAGO (CBS) -- Chicago has become the largest city in the U.S. to require tipped workers make the full minimum wage, as aldermen approved an ordinance phasing out the subminimum wage for wait staff, bartenders, and other workers who rely on tips.
The vote is one of the first major political victories for Mayor Brandon Johnson and his progressive allies on the City Council.
By a 36-10 vote, the City Council signed off on a compromise negotiated between Johnson and the Illinois Restaurant Association, which would phase in higher wages for tipped workers over the next five years instead of two, as originally planned.
The 10 alderpeople who voted against the ordinance were: Brian Hopkins (2nd), Nicole Lee (11th), Marty Quinn (13th), Matthew O'Shea (19th), Scott Waguespack (33rd), Nicholas Sposato (38th), Samantha Nugent (39th), Anthony Napolitano (41st), Brendan Reilly (42nd), and James Gardiner (45th).
With Friday's vote the minimum wage for tipped workers in Chicago will match the full minimum wage by July 1, 2028. The minimum wage in Chicago for most workers is $15.80 per hour, while the minimum wage for tipped workers is $9.48 an hour. Employers are supposed to make up the difference if an employee's wages and tips don't total the full minimum wage.
The tipped minimum wage is currently 60% of the full minimum wage in Chicago. Under the 5-year plan to eliminate the tipped minimum wage in Chicago, the tipped minimum wage will rise to:
- 68% of the full minimum wage on July 1, 2024
- 76% of the full minimum wage on July 1, 2025
- 84% of the full minimum wage on July 1, 2026
- 92% of the full minimum wage on July 1, 2027
- 100% of the full minimum wage on July 1, 2028
Notably, the full minimum wage in Chicago is increased each year on July 1 to match the increase in the Consumer Price Index, or 2.5%, whichever is lower. The full minimum wage in Chicago stands at $15.80 per hour, making the current tipped minimum wage $9.48 per hour.
Supporters said tipped workers deserve to be paid a living wage, regardless of how much customers decide to tip them.
"When we talk about building safer communities, we're talking about folks having a minimum wage, and we're talking about economic development and viability in our communities. We are talking about making sure we have a fair wage," said Ald. Jessie Fuentes (26th), who led negotiations on the ordinance.
Opponents were booed out of the City Council Chamber during Friday's vote. Critics of the ordinance have said customers will end up tipping less when restaurants and bars raise their prices to cover the costs of higher wages, and that those costs will be too much of a burden for some businesses already struggling to stay afloat.
"My constituents there feel that this is going to hurt more than it's going to help our local economy," Ald. Lee said.
The Illinois Restaurant Association tried to convince the City Council to back a counterproposal that would have increased tipped wages only at restaurants earning more than $3 million in annual revenue, but that proposal went nowhere.
Instead, the Illinois Restaurant Association agreed to back the phaseout of the subminimum wage if the City Council gave bars and restaurants five years to do so, rather than the original plan of two years.
Many restaurant owners have said they could be forced to cut back on staff to save on labor costs, or could close altogether.
But Fuentes said tipped workers have been fighting for years to get the same minimum wage as anyone else. She said she's confident restaurants will still be able to make a profit after giving workers a raise.
Supporters also argued that systemic inequities and bad employers have caused some employees to make less than they need to survive on the subminimum wage.
Chicago employers are required to make up the difference when their workers' hourly pay and tips don't add up to the full minimum wage, but supporters of phasing out the subminimum wage said many businesses ignore that requirement, and workers don't report them out of fear of losing their jobs.
