Evanston Debates Tipped Minimum Wage As Activists Declare Victory in Chicago

National labor activist Saru Jayaraman declared victory on Monday night in Chicago’s fight to eliminate the tipped minimum wage even as the city council has yet to schedule a hearing to discuss the matter.

“Chicago already has the votes to pass this on October 4,” Jayaraman said.

Jayaraman, who founded One Fair Wage, the national organization pushing to abolish the subminimum wage, told Evanston council members that it’s a done deal in Chicago and that Evanston will lose jobs to Chicago if they don’t act to eliminate tip credits as well.

Based on One Fair Wage’s estimation, Chicago is poised to eliminate the hourly tipped wage, which is $9.40 plus tips equating to at least $15.80 per hour; the process would raise wages to $15.80 per hour regardless of tipping by 2025. Evanston’s council tabled the ordinance to an October 5 meeting — neatly a day after One Fair Wage expects Chicago to approve its ordinance. During the Evanston meeting, council officials shot down a motion for a three-year transition period.

Chicago Mayor Brandon Johnson has embraced the national campaign, one endorsed by Bernie Sanders. Jayaraman said the mayor sees increasing wages as a way to engage youth, employ them, and steer them away from criminal activity in Chicago. The Daily Line reported that labor unions donated heavily to Johnson during his first 100 days in office.

Despite Jayaraman’s optimism, Illinois Restaurant Association President Sam Toia says that if Johnson is honest about wanting to listen and collaborate, Jayaraman’s proposed timeline is ambitious. “We haven’t even had a hearing yet,” Toia says.

With the ordinance’s 25 co-sponsors, that number of votes alone is enough to gain approval in Chicago. Toia spoke highly of Johnson, Deputy Mayor Jason Lee, and 35th Ward Ald. Carlos Ramirez-Rosa, one of the ordinance’s sponsors and a member of the city’s Democratic Socialist Caucus. Toia is confident they’ll listen to any concerns restaurant operators have about tip credits.

In Evanston, the standard hourly minimum wage is $13.70 and the tipped wage is $7.40. Two Chicago restaurant owners — Back of Yards Coffee’s Jesse Iñiguez and Terri Evans of Windy City Ribs — spoke at the Evanston meeting backing the ordinance. Iñiguez spoke about the anti-Black history of tips and how ridding itself of the tipped wages would align with Evanston’s progressive profile, one that was bolstered two years ago when the city began distributing $10 million in reparations to descendants of Black slaves.

Amy Morton, owner of the Barn and French restaurant, LeTour, grew up around restaurants; her father founded Morton’s Steakhouse. She voiced her objections to the proposal, stating that while she supports higher wages, she felt the council should focus on crime. She pointed to one of her cooks being shot by a BB gun after leaving a shift at the restaurant: “He was terrified. Why aren’t we focusing on what everyone in Evanston really needs?”

Timing was also a worry for David Lipschutz, owner of Blind Faith Cafe. He says business has been down 30 percent since the pandemic. He’d prefer if the ordinance was adopted statewide and feels customers will see higher prices and dine in other communities, like Skokie or Wilmette, that use the tipped wage. He estimates the ordinance would add $70,000 of expenses annually: “I encourage the council to reconsider — you are affecting business and higher check averages do affect [customer] volume.”

Morton added that at 6 percent, Evanston has one of the country’s highest liquor taxes and that the city should cut its restaurants some slack given how they’ve been squeezed historically. Concerned restaurant owners like Morton and Lipschutz also raised concerns about a one-size-fits-all ordinance that sets the same requirements for fast-food restaurants or coffee shops may use a counter service or a screen to take orders digitally versus a mom-and-pop diner or upscale restaurant that employs servers.

Evanston Eighth Ward Ald. Devon Reid, a progressive ally, diminished those concerns by saying “the best and fanciest restaurants” need not worry: “Great, your workers will continue to make more than the minimum wage.”

Reid said the wage increase would determine if some can afford to live in Evanston and that workers face “the same exact inflation” paying for rent and groceries as restaurant owners with increased food and labor costs. The alderman also showed disdain for his colleagues who have never worked a minimum wage job and “lacked proximity to those issues.” Reid’s ward has Evanston’s largest Black population and one of the largest Latinx populations, two groups that would benefit the most from the ordinance, according to the alderman.

Terri Evans supported Reid’s take, wondering why North Side restaurants, surrounded by a population with larger than average disposable incomes, would struggle in raising wages when she can do it at her restaurants in the South Loop and Englewood.

High Road Restaurants, is a program from One Fair Wage that takes input from restaurants to tweak legislation and gain their support. In Chicago, they recently worked with Thattu, an Indian restaurant that opened this year without tipping or service fees. High Road’s Mikey Knab told Evanstonians that they’ve worked with restaurants to make ordinances more business-friendly. For example, the Evanston ordinance ensures surcharges are tax-free. Adopting service charges is a popular way restaurants have dealt with the loss of the tip credit, Knab says. Thattu’s method, without tips or surcharges, happens rarely, he adds. Tips are confusing for restaurants when it comes to reporting taxes, Knab adds, and by worrying less about them, this ordinance could help owners with their bookkeeping.

Toia isn’t so sure, saying a local ordinance wouldn’t protect fees from being taxed as there’s a difference in the IRS’s eyes between tips or auto gratuities (standard tips automatically added to a check) versus service fees. Keeping service fees tax-free is an action that would have to come at the federal level, Toia says.