Chicago City Council Votes to End the Tipped Minimum Wage

Before Ald. (26th Ward) Jessie Fuentes celebrated Chicago’s move to vanquish the tipped minimum wage, she attempted to quell fears that the move would ruin small businesses.

Fuentes, one of the ordinance’s original sponsors, made a distinction between the government supporting “hospitality” — the business side of the industry — and its workers. Fuentes said the council is accustomed to showing up for restaurant owners and will continue to do that. However, the new ordinance was about their employees, particularly the BIPOC group of supporters wearing pink shirts watching the meeting. “Today we are showing up for workers,” Fuentes said.

On Friday, October 6, the Chicago City Council voted 36 to 10 in favor of the ordinance, which will phase out the city’s tipped minimum wage — subminimum wages that are augmented by tips — over five years. The ordinance calls for gradually raising the city’s tipped minimum wage of $9.48 to the standard minimum wage, presently at $15.80 per hour. Progressives around the country targeted the tipped minimum wage and before his election in May, Mayor Brandon Johnson made it part of his platform.

Mayor Johnson had allied with the progressive group One Fair Wage, an organization that previously pushed to raise the minimum wage to at least $15 per hour. One Fair Wage’s founder Saru Jayaraman called Friday’s vote “historic” and cried after the clerk announced the final tally. Ald. (35th Ward) Carlos Ramirez-Rosa, another ordinance co-sponsor, said the ordinance righted a wrong: “We failed to include tipped workers when we increased the minimum wage,” he said.

Supporters chanted “one fair wage” several times during the meeting and booed a group of restaurant owners, who appeared in opposition to the measure, as they exited the council chambers before the vote. Tipped minimum wage is seen as a tax break for restaurants, allowing owners to pay eligible employees less than the $15.80 standard.

Chicago joins Los Angeles as a trophy for the One Fair Wage movement, giving the group wins in two out of America’s three largest cities. Its next targets are New York City and Boston. But organizers are hoping to direct a campaign in Springfield, as well, forcing downstate lawmakers to even the playing field for minimum wage workers statewide. A few city council members represent “border wards” and face competition from suburbs like Niles, Skokie, and Park Ridge — none of those cities are particularly known for restaurants. Fuentes urged those worried about uneven conditions to help One Fair Wage with its statewide campaign. California, Alaska, Minnesota, Montana, Nevada, and Oregon have already adopted similar measures, as did Washington, D.C. Predicting the impact is challenging. In LA, for example, operators are seeing a renaissance of quick-service restaurants and higher-quality fast-food options.

Ashok Selvam/Eater Chicago

Some restaurant owners feel the new law will stifle the opening of new restaurants, lead to staff cuts, and reduce what some workers at upscale restaurants take home in tips. Last month, the Illinois Restaurant Association dropped its costly campaign against the ordinance, in favor of a compromise to increase the phase-in period from two to five years while establishing a private fund to help independent restaurants transition.

Ald. (11th Ward) Nicole Lee, represents Chinatown and its 150 restaurants. She explained her “no” vote before the vote: “My constituents there feel this is going to hurt more than it’s going to help our local economy.”

Still, many restaurant owners have already adapted and supported the ordinance. If workers can’t pay their bills, how can diners expect a good experience at a restaurant?

“Our community brings in our customers, it gives us our employees, it makes our business prosper,” Beth Wagner, of Honky Tonk BBQ in Pilsen, said before the vote. “If that’s the case, we need to give back and small business has always done that for communities. We have to think about who the people are that we are surrounded by.”

Though it’s a major win for Johnson and his allies, Ald. (40th Ward) Andre Vasquez, who voted in favor, warned his colleagues there was more work to be done to support the restaurant industry: “The people in this room — we make sure that people upstairs aren’t sticking into them every chance they get by slowing business, slowing permitting, slowing processes...”

When activists lobbied former Mayor Lori Lightfoot’s administration to adopt an ordinance, one of the prevailing narratives was that One Fair Wage wanted to outlaw tips. That sent fear down the spines of rank-and-file bartenders and servers who willingly supported the Illinois Restaurant Association’s campaign to oppose any measures.

This time around, One Fair Wage chose its rhetoric more carefully. While pointing out the racist and sexist histories of tips, the tone of the campaign changed to letting workers know that the campaign wanted them to earn a higher base wage in addition to tips. Some restaurants will raise prices — though One Fair Wage argues that’s already happened during the pandemic. Diners could also see more service fees (a controversial practice for consumers who want to know how the fees are dispersed and for employers who aren’t sure if they’re taxable — unlike tips).

But with higher costs, will customers continue to tip? Alderpersons (38th Ward) Nicolas Sposato and Vasquez both mentioned that customers need to be better informed on how to tip properly. For instance, workers will still need tips in five years — even if the standard minimum wage is raised. The ordinance doesn’t mean workers don’t need tips, they’re just better protected against bad actors and slow days of service.

There are also different service models including digital kiosks that eliminate the need for servers. Ald. (41st Ward) Anthony Napolitano said the use of kiosks and food runners would lead to a loss of hospitality and jobs. The potential shift “scared him.”