Chicago Enters Year 2 of Tipped Minimum Wage Ban With Uncertainty. | Eater Chicago

"An institution on the Northwest Side that closed in late June after 62 years, this Jefferson Park restaurant isn’t being remembered for its ribs; instead, its May closure became a political touchstone as critics of Mayor Brandon Johnson used it to argue that getting rid of the tipped minimum wage is harming the restaurant industry. The Tribune’s coverage of the May closure included comments from Illinois Restaurant Association CEO Sam Toia about escalating costs leading to more closures, and the paper’s editorial even ran the provocative headline above a photo of the spot: "Why Chicago Has a Restaurant Crisis." A May piece in the Sun-Times similarly spun a tale of impending doom, and the restaurant association launched a campaign before Memorial Day as 44th Ward Ald. Bennett Lawson introduced a proposal to repeal the ban. One Fair Wage co-founder Saru Jayaraman calls this a standard playbook and says, "The [National] Restaurant Association knows that if they let it happen in New York, a lot of other states on the East Coast will follow — in the Northeast, in particular." In Chicago, after heated deliberations between Johnson’s camp and the restaurant lobby, the City Council agreed in 2023 to gradually rid the city of the subsidy used by restaurants over five years; in practice this means the tipped minimum wage will increase annually by 8 percent every July through 2028 (this year bringing the rate for employers with four or more workers to $12.62 per hour), while the standard minimum wage has also jumped to $16.60 per hour. Critics continue to debate whether tipped workers will earn more, arguing inflation and spiking costs are forcing customers to tip less, which has pushed solutions like service fees into the fray. Competing claims about the ordinance’s impacts are stark: Johnson’s camp says that 10,000 jobs have been created since the ordinance went into effect in July 2024, while the restaurant lobby claims 5,200 jobs were lost between July 2024 and December 2024; there are also conflicting figures about the number of restaurant closings and openings and how much the city has lost in sales-tax revenue. The debate has also produced confusion among workers and owners about tip pooling and sharing—One Fair Wage’s Neela Caicedo-Rosario clarifies that sharing is permitted—and heightened unease for independent operators who lack deep-pocketed investors. At a West Side appearance with One Fair Wage, Johnson heralded the Chicago ordinance: "There is no place for an antiquated system such as this, particularly in a great global city," adding, "And so the One Fair Wage became a matter of justice, economic justice." 26th Ward Ald. Jesse Fuentes, who helped broker a compromise, framed the practical choices succinctly: "Some individuals are going to do the minimum wage and keep tips, some individuals are going to do the minimum wage and have a service charge, so the service charge goes to the front of the house and the back of the house," and cautioned that "No restaurant is the same — it’s not a monolithic industry, right? And so that means there’s going to be different challenges depending on the business model, and we have to target one sort of restaurant at a time." - Ashok Selvam