Should tipped workers make the same minimum wage as non-tipped workers? A pending ordinance in City Council would raise the city’s minimum wage to $15 an hour by 2021 – including for workers who earn tips.
Those in favor of the plan say it would lead to more financial stability for tipped employees, while those opposed believe it would harm independent restaurants, increase menu prices and cut hours for waitstaff.
Last month, City Council members heard testimony from both sides of the debate over the “Raise Chicago” ordinance introduced by Ald. Sophia King (4th Ward) in June.
The proposal to bump the wage of tipped employees has drawn criticism from groups like the Illinois Restaurant Association, which believes that eliminating the tip credit will harm the city’s restaurant industry. The IRA is not opposed to raising the minimum wage, says Sam Sanchez, vice chairman of the group, but suggests an increase should align with the state’s timeline to get to $15 by 2025. Under that law, the base wage for tipped workers will rise to $9 an hour by 2025.
The base pay for tipped workers in Chicago is currently $6.40 an hour; outside of the city the hourly wage is $4.95 an hour. The federal wage for tipped workers is $2.13.
Employers are required under law to make up the difference for employees that earn tips. In October 2018, City Council approved of the formation of the Office of Labor Standards to enforce the city’s minimum wage, paid sick leave and anti-wage theft.
Supporters of increasing the minimum wage for tipped employees say the law is not always followed by restaurant owners.
Passing the “Raise Chicago” ordinance will, they say, lead to more financial stability for tipped workers, many of whom are women.
“The restaurant industry is one of the largest and fastest-growing private sector employers both in Illinois and Chicago and in the United States. Chicago has the second largest restaurant industry,” said Saru Jayaraman, co-founder and president of Restaurant Opportunities Center United, an advocacy group for restaurant workers. Yet the industry “continues to be the lowest paying employer in the United States and in Illinois,” she said.
Another advocacy group, One Fair Wage, found that in states where tipped workers are paid a minimum wage base “face a smaller gender wage gap and a lower poverty rate,” according to a 2019 study by the National Women’s Law Center.
Women represent two-thirds of tipped employees in the nation. In Illinois, women make up almost 70% of tipped employees and women of color comprise over 20%. The poverty rate for non-minority women in Illinois is 17% and 21% for women of color.
“In Chicago half of the tipped workers, including myself, still rely heavily on government assistance including, food stamps and medical cards because they [employers] don’t provide insurance or it’s too high,” said Nataki Rhodes, lead organizer with ROC’s Chicago chapter.
“I faced eviction because I couldn’t maintain and pay my rent on time,” she said.
The ordinance also extends to people who are employed by the city’s sister agencies such as the Chicago Transit Authority and Chicago Park District, youth employment programs and transitional employment programs.
Seven states including California, Oregon, Washington, Alaska, Nevada, Montana and Minnesota have established one minimum wage for people in all industries.