Business
Deal Reached to Delay End of Tipped Minimum Wage, Even After Johnson Veto
(DGLimages / iStock)
The end of the tipped minimum wage in Chicago would be delayed for an additional two years under a compromise measure advanced Tuesday by a key City Council panel.
The City Council’s Workforce Development Committee voted unanimously to send the measure, crafted by rookie Ald. Walter “Red” Burnett (27th Ward), to the full City Council on May 20.
A spokesperson for Mayor Brandon Johnson said he supported the compromise measure even though it would undermine one of his major legislative accomplishments as he prepares to run for a second term as mayor.
The measure set for a final vote next week “preserves the phaseout and the security it has brought tipped workers while addressing legitimate industry concerns around the immediate impact of global instability on business costs,” according to a statement from the mayor’s office.
In March, the City Council voted 30-18 to reverse its 2023 vote to phase out the tipped minimum wage. Johnson vetoed that measure, and the City Council failed to override the mayor.
Johnson called that failed override “a victory for working people across Chicago.”
“We are not backing down from our commitments to workers in our city,” Johnson told reporters on April 15. “In recent months, we’ve seen a well-organized, corporate-funded effort to blame rising costs on Black and Brown workers while seeking to take hard-fought raises away from the very same workers.”
Before issuing his veto, Johnson dismissed concerns about the cost of ending the tipped minimum wage for Chicago businesses.
“Mayor Johnson remains committed to raising wages for working families as a major component of his affordability agenda, as well as supporting the thousands of Chicago small businesses committed to delivering fair wages and fair prices for their employees and customers,” according to a statement from his office.
Ald. Jessie Fuentes (26th Ward), who crafted the plan to phase out the tipped minimum wage by 2028 that passed the City Council in 2023, said she could live with the delay, but remained committed to ending the tipped minimum wage.
Saru Jayaraman, the president of the nationwide One Fair Wage campaign to end the tipped minimum wage, told the committee her organization could live with the two-year delay for most businesses.
But Jayaraman warned alderpeople that they were voting to freeze wages for some of Chicago’s lowest-income workers at a time when inflation was surging.
Illinois Restaurant Association CEO Sam Toia told the committee that the compromise measure was “not ideal” but would allow restaurant and bar owners more time to adjust to the change and manage their costs.
Toia said the two-year delay provides “a critical lifeline to help restaurants sustain their operations during these challenging economic times.”
Tipped workers must now be paid $12.62 per hour by their employers, assuming tips account for at least another $3.98 per hour, according to city rules.
The city’s minimum wage for non-tipped workers is $16.60 per hour, and is set to jump on July 1, 2026, based on inflation.
If approved, the measure advanced Tuesday by the Workforce Development Committee means that tipped workers in Chicago would not get another city-ordered wage boost as scheduled on July 1, 2026, and July 1, 2027.
Instead, the next city-ordered boost for tipped workers would not come until July 1, 2028, when businesses that employ workers who earn tips would have to pay 84% of the regular hourly minimum wage to their employees, up from the current 76%, according to the proposal.
On July 1, 2029, businesses that employ workers who earn tips would have to pay 92% of the regular hourly minimum wage to their employees, and a year later would have to pay the full hourly minimum wage, according to the proposal.
Businesses with more than three but fewer than 21 employees would have until July 1, 2033, to pay their tipped workers the full hourly minimum wage, according to the proposal.
The mayor, who faces reelection in less than a year, cast the fight over the tipped minimum wage as a battle against those who would block Black and Latina women working in the service industry from being paid fairly.
The measure vetoed by Johnson was designed to freeze the tipped minimum wage, which is sometimes referred to as the subminimum wage, at 76% of the city’s hourly minimum wage.
Supporters of that freeze said it was a mistake for Chicago to join Alaska, California, Guam, Minnesota, Montana, Nevada, Oregon and Washington. In June, Washington, D.C., leaders put their efforts to phase out the minimum wage on ice.
Restaurant industry groups and supporters of the measure to keep the tipped minimum wage on the books contend that the pay raises have cut into restaurants’ already thin margins, forcing them to cut jobs and shelve expansion plans.
There is no sign that restaurants closed at a higher rate after the City Council’s vote in 2023, Johnson said at the time of his veto, dismissing critics’ concerns.
Johnson has also said ending the tipped minimum wage would protect workers who rely on tips because they are more vulnerable to sexual harassment, wage theft and abuse than other employees.
The 2023 vote was a major victory for Johnson, who vowed to end the tipped minimum wage during his campaign for mayor, calling it a vestige of slavery since most of those who rely on tips to earn a living wage are more likely to be Black and Latina women.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
