Chicago restaurants want Mayor Johnson to support repeal of law phasing out tipped minimum wage
Some Chicago restaurants are hoping Mayor Brandon Johnson follows D.C. Mayor Muriel Bowser's lead, and moves to repeal a law eliminating the city's sub-minimum wage for tipped workers.
Last July, Chicago started to phase out the lower minimum wage for tipped workers, meaning their employers would start to pay them more, increasing their wages over the next five years until reaching the full minimum wage by 2028.
Chicago was following cities like Washington, D.C., where they'd already had a similar system in place. But on Monday, Bowser said that method is failing employees and small businesses and proposed repealing that city's law eliminating the sub-minimum wage for tipped workers.
Some small businesses in Chicago said this new way of doing business is the final nail in the coffin for their American dream.
They've already been dealing with increasing costs for goods and labor, and phasing out the lower minimum wage for tipped workers is adding to that burden.
"Just drive down your city streets. Look to your left, and look to your right, and count how many stores are vacant," said Mario Ponce, the former owner of Takito Street in Lincoln Park, which closed in February.
After more than a decade in business, Ponce closed Takito Street in February; 65 people lost their jobs.
"The labor part of our business model, and I would argue most restaurant business models, is the most expensive part. So if your wages are going up quickly, how do you pivot?" he said.
Wages for tipped workers in Chicago went up from $9.48 to $11.02 per hour last summer. Over the next five years, that wage will increase 8% each year until it reaches the full minimum wage in 2028.
Illinois Restaurant Association CEO Sam Toia, whose organization opposed eliminating the lower minimum wage for tipped workers in Chicago, said Bowser is doing the right thing by asking the D.C. Council to repeal the 2022 measure passed by voters, phasing out the lower minimum wage for tipped workers in the nation's capital city.
"We think that's pragmatic decision-making that accounts for the job losses and restaurant closures that D.C. has faced since the elimination started," Toia said.
The Illinois Restaurant Association said 100 Chicago restaurants closed between July 1, 2024, and Dec. 31, 2024, with 5,200 jobs lost.
"Stop increasing the cost of doing business. It affects the consumer, because prices are going to increase; and it effects employees, because small businesses cannot afford the expense," Ponce said.
Nonetheless, Johnson defended the ordinance phasing out Chicago's tipped minimum wage.
"It stabilized our workforce," he said.
The mayor feels the "One Fair Wage" ordinance approved by the City Council in 2023 has been a huge success.
"For businesses, having a strong consistent workforce, there's a benefit to that particular establishment," he said.
Supporters of the "One Fair Wage" policy claim tipped workers in Chicago are earning more overall, because their base pay is higher and they still get tips on top.
They said this new system helps women and people of color who were not making the minimum wage without this rule, although under the old law, business owners were supposed to make up the difference when an employee's combined wages and tips didn't add up to the full minimum wage.
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