City Council committee backs proposal to raise minimum wage for tipped workers
CHICAGO (CBS)-- A Chicago City Council committee on Wednesday advanced a proposal to phase out the lower minimum wage for tipped workers over the next five years, setting up a vote by the full City Council next month.
The City Council Committee on Workforce Development voted 9-3 to approve a compromise negotiated between Mayor Brandon Johnson and the Illinois Restaurant Association, which would phase in higher wages for tipped workers over the next five years instead of two.
That would mean the minimum wage for tipped workers would 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.
Restaurant owners are worried it'll impact their bottom line and costs could trickle down to the consumer. Many have said they worry raising wages raises the cost of everything, which means customers could tip less than ever on top of new prices.
Some workers who receive tips right now also worry that this plan will actually cause them to go home with less money than they are currently making, despite an actual salary increase, if customers end up tipping less.
Illinois Restaurant Association president Sam Toia said, while restaurant owners largely do not agree there needs to be an increase in the minimum wage for tipped workers, he believes phasing in the higher wages over five years rather than just two as originally proposed is "a compromise we can all live with."
"Change is always difficult, but negotiating requires concessions on both sides to find a solution," Toia said.
However, Michael Saltsman, executive director of the Employment Policies Institute, a nonprofit public policy research group, said the debate over the eliminating the lower minimum wage for tipped workers "has omitted the voices of Chicago's servers and bartenders."
"They support and benefit from the current tipped wage system, and they don't want it to change," he said, arguing that they will make so much less in tips once their wages go up, they'll end up taking home less money.
Saltsman also said many servers and bartenders will end up out of a job when some businesses cut back on staff.
"Tipped workers have not been consulted in a meaningful way," he said. "They want to know why they were not consulted."
Nataki Rhodes, an organizer for the One Fair Wage coalition that has pushed for years to eliminate the subminimum wage for tipped workers, said she is a single mother who worked for decades as a tipped worker, said restaurant owners have used scare tactics in the past to defeat similar proposals in other cities.
She said most servers, especially Black and Brown women, live in poverty making less than the full minimum wage, plus tips. She also argued thousands of workers have left the industry in recent years because of low wages, and won't come back without getting the full minimum wage plus tips.
"If we can't take care of our workers here in Chicago, then what are we doing?" she said.
Emily Mortier, a bartender at Federales, was among the tipped workers who told City Council members they fear the move here in Chicago will cut into their take-home pay.
"I firmly believe that, while it will look good on paper with the wage being raised for service industry workers, you're going to see a lot of service fees added. You're going to see a lot of closures; specifically small businesses, and family-owned restaurants and bars," she said. "I'm 100% positive the amount that I take home will be less, because the restaurant or bar will have to use a service fee to go towards that they're paying higher for their employees, and it's going to deter patrons to tip."
Ald. Carlos Ramirez-Rosa (35th), Mayor Johnson's floor leader, argued workers won't lose their tips, pointing to Los Angeles, saying it has the highest national average in tipping at restaurants and bars, even though California has eliminated the subminimum wage for tipped workers.
"Small business owners can find a way to make this work," Ramirez-Rosa said.
Saru Jayaraman, director of the University of California at Berkeley's Food Labor Research Center, and president of the One Fair Wage coalition, said in seven states that have already eliminated the lower wage for tipped workers, their hourly pay has gone up.
But critics pointed to Washington, D.C., which also has begun phasing out the subminimum wage for tipped workers. Recent data shows consumers there are among the least generous tippers in the nation.
Many restaurants in D.C. have added additional service fees, though it's too soon to tell how that will affect tipping habits.
Ald. Brendan Reilly (42nd) argued the City Council should take more time to discuss the potential impacts of the ordinance before voting.
"These negotiations took place rapid-fire and not in the light of day," he said. "Why rush this? If it's good policy, it'll stand up."
Nicholas Sposato (38th) said "I think this is going to be a job and business killer," especially for wards that border the suburbs, saying more restaurants will simply opt to open just outside the city limits.
The full City Council is expected to vote on the proposal to eliminate the lower minimum wage for tipped workers on Oct. 4.
