Chicago would be the largest American city to move on its own to abolish a subminimum wage for tipped workers under a deal reached Monday between Mayor Brandon Johnson’s allies in the City Council and the restaurant lobby.
The new substitute ordinance, set to be introduced in a City Council committee this week, would mandate that Chicago businesses offer tipped workers the same minimum wage as all other employees in the city within the next five years, according to its sponsors.
“This mayor is prioritizing Black women and Latinas that are the head of households, who oftentimes struggle to make ends meet, who often struggle in the restaurant industry to make enough money and tips to even reach the minimum wage,” the mayor’s floor leader, Ald. Carlos Ramirez-Rosa, 35th, said Monday. “And so, it was important to make sure that the mayor delivered on this important campaign promise.”
The measure is set for a preliminary vote Wednesday in the council’s Workforce Development Committee, with a full council vote expected later this fall.
The latest proposal comes days after the Illinois Restaurant Association suggested a lesser measure that Johnson’s council allies said wasn’t good enough.
“Mayor Johnson was able to bring both sides to the table in securing this agreement, which is a huge step forward in delivering a fair wage for workers, many of whom are Black and brown women who are heads of households and anchors of their communities,” the mayor’s office said in a statement Monday.
If passed, the ordinance would make Chicago the largest city in the U.S. to independently phase out a tipped wage, and the second-largest city to require one unified wage for tipped and non-tipped workers.
Los Angeles already bans a subminimum wage for tipped workers but that’s under a California state requirement that employers pay those employees the full minimum wage. Besides California, Alaska, Minnesota, Montana, Nevada, Oregon and Washington also have abolished the tipped wage, according to the U.S. Department of Labor.
Chicago’s minimum wage for tipped workers is currently 60% of the city’s $15.80 per hour minimum wage, or $9.48 per hour. If tipped workers do not receive enough in gratuities to reach the $15.80 minimum, large employers must make up the full difference while smaller employers have to ensure the tipped workers earn at least $15 per hour.
The city’s minimum wage is set to increase annually by the rate of consumer price index hikes or by 2.5%, whichever is lower. Illinois’ state minimum wage is now $13 per hour.
The five-year phase out of Chicago’s subminimum wage — longer than the two years detailed in the original proposal — means that starting next July, tipped workers will be due raises that will shrink that 40% gap by 8% each year until parity is reached by July 1, 2028.
Sam Toia, president of the Illinois Restaurant Association, said he dropped his opposition to the original bill, sponsored by Ald. Jessie Fuentes, 26th, with co-sponsors Alds. Ramirez-Rosa, Rossana Rodriguez-Sanchez, 33rd, and Julia Ramirez, 12th, because he felt the Monday agreement was the best option.
“Obviously, I know how to count votes, right?” Toia said. “The mayor had the votes, even with a two- or three-year phase in. He is an organizer. He understands this. … A five-year plan is usually what a bank asks you when you go in for a loan. That’s why I always thought five years would be good.”
Toia’s group late Friday floated its counterproposal, which would have brought the tipped wage up to $20.54 but only for restaurants earning over $3 million in annual revenue. It failed to gain traction.
That was unlike the case in 2019, when Illinois Democrats pushed through legislation backed by the restaurant lobby that raised the state minimum wage during Gov. J.B. Pritzker’s first weeks in office. The move will bring the state’s minimum wage to $15 per hour by 2025, which restaurant owners were OK with because it preserved allowing tipped workers to be paid a lower wage.
Saru Jayaraman, president of the national One Fair Wage movement to abolish the tipped wage, described the pending deal as a “victory for restaurant workers, advocates and the owners who will see more people return to the industry.”
“Today’s announcement marks a seismic shift in the movement to end the subminimum wage for tipped workers nationwide,” Jayaraman wrote in a statement. “We aren’t just celebrating a policy change, we are witnessing a surging momentum for worker power. This breakthrough is an example of what is possible when workers, advocates, and elected leaders with the political courage stand together.”
Advocacy groups have ramped up the push to eliminate the tipped minimum wage across the country in recent years, arguing that reliance on tipping leads to unpredictable earnings for workers and can force service staff to put up with harassment or rude behavior from customers because they depend on tips for a significant portion of their earnings. Bills to phase out the subminimum wage have emerged in several states in recent years.
In 2019, some members of the Chicago City Council pushed to phase out the subminimum wage in the city, a move that faltered under heavy lobbying from the restaurant industry. But following the COVID-19 pandemic as well as record inflation, the local scene is in a very different predicament, Toia said.
“Obviously, a lot of restaurant owners, operators will tell you, the last couple of years have been really rough coming out of the pandemic, especially with double-digit inflation,” Toia said. “There’s only two things you can control in the restaurant industry: your product costs and your labor costs. … There could definitely be people cutting back on labor.”
Fuentes, however, countered that “workers have always had the power,” and employers could benefit by courting the best talent and paying them what they’re worth.
“I think that our workers are beginning to organize and mobilize and make decisions that are best for them,” Fuentes said. “We have shown in the city of Chicago that we are a labor city, that we advocate, that we organize and we mobilize for our workers. And when we do that, we win.”
Chicago Tribune’s Dan Petrella contributed.