Business
How Chicago’s Changes to Tipped Minimum Wage Are Impacting Businesses, Workers
Chicago’s tipped workers may have noticed a little more in their paycheck this summer.
It’s part of the One Fair Wage ordinance that took effect last year. The ordinance phases out the tipped minimum wage in five years, so that it matches the citywide minimum wage by July 2028.
Last year, wages went up to $11.02 per hour. This year, it increased again to $12.62.
While Mayor Brandon Johnson and advocates say the move helps the city’s lowest-paid workers, critics worry about the higher labor costs facing restaurants.
Currently, employers pay a tip credit — a portion of the hourly minimum tipped wage — to their workers. The rest of workers’ pay is made up of tips to equal at least the city-mandated minimum wage of $16.60 per hour.
Scott Weiner, board chair of the Illinois Restaurant Association, said this helps bring up workers’ pay, since employers could be penalized if they don’t pay the tip credit. He said a wage bump could mean staff work fewer hours as employers make up for higher costs.
“In general, there is no additional margin so you do have to raise your prices and you also unfortunately have to cut staff,” Weiner said. “So many restaurants have moved to guests ordering from the QR code and just having a limited amount of service staff run drinks and be there to answer questions. Ultimately a lot of the people that this was intended to help just in the first year have been hurt.”
Minimum wage advocates argue that many service workers are disproportionately impacted by the high cost of living in a city like Chicago and that a subminimum wage isn’t livable, even with additional tips.
According to the Bureau of Labor Statistics, servers in Illinois make an average wage of $16.68 per hour, and an average annual salary of $34,700.
Nataki Rhodes, lead organizer with One Fair Wage, has worked several tipped service jobs and said the current wage isn’t livable.
“A lot of tipped workers live in poverty,” Rhodes said. “You do have slow seasons in restaurants. I, myself, when I was a worker, I suffered from eviction. And so we do have a high amount of eviction rates and high amount of homeless rates among those that are working and they still can’t afford to pay their rent.”
