Chicago’s minimum wage will rise to $15 by 2021 and apply to youth, people with disabilities and other groups that historically have been paid less, but restaurant servers and other tipped workers will continue to receive a subminimum wage.
Chicago’s City Council on Tuesday approved a plan proposed by Mayor Lori Lightfoot that brings Chicago to $15 an hour, up from $13 currently, four years ahead of when the state is set to get to that threshold.
The minimum wage will rise to $14 an hour on July 1 and $15 on July 1, 2021. Smaller employers with fewer than 20 workers will have until 2023 to get to $15. Business with fewer than four employees are exempt.
The plan, included in a management ordinance tied to Lightfoot’s first budget, attempted to balance the interests of worker advocates against those of restaurant industry groups that staunchly opposed an earlier proposal to eliminate the subminimum wage for tipped workers.
Lightfoot’s plan raises the subminimum wage for tipped workers to $8.40 an hour on July 1, from $6.40 currently, and directs the city to study the impact of tipped wages on working-class families so it can revisit the issue in the future. The tipped wage will be set at 60% of the minimum wage — meaning it will rise to $9 in 2021 — and increase accordingly as the minimum wage rises annually with the consumer price index.
Her compromise angered activists who pushed to get rid of the subminimum wage for tipped workers, some of whom struggle to make ends meet. As Lightfoot touted the passage of the $15 wage toward the end of Tuesday’s City Council meeting, a man in the audience stood and yelled “You left out the tipped workers” and “You disgraced the black community.” Lightfoot thanked him for expressing himself and asked the guards to escort him out.
Employers are legally required to make up the difference if an employee’s tips don’t add up to the regular minimum wage, but worker advocates say that doesn’t always happen because of exploitative practices or shoddy record keeping.
“I’m just really disappointed that the city of Chicago doesn’t understand that all tipped workers are not tipped the same,” said Honni Harris, 46, who worked as a server in Chicago restaurants and clubs for 24 years and now is an activist with the Restaurant Opportunities Center, which advocates for scrapping the tipped wage. “There are workers who can bring home $600 in a weekend, but what about those workers who are working at the pancake house, or at Denny’s? They can’t pay their rent.”
Lightfoot’s office has previously explained that the mayor decided a jump to $15 for tipped workers would be too “dramatic” a change, especially for small restaurants. The business model of many restaurants in the city is based on customer tips subsidizing employee wages.
Erick Williams, owner of the acclaimed restaurant Virtue in Hyde Park, said he appreciated the compromise. He worried his restaurant, which opened a year ago and has 35 employees, wouldn’t be able to survive such a steep wage increase and that customers might not tip as much if they knew servers were earning minimum wage, potentially decreasing their overall pay. He said his servers on average make, with tips, $30 an hour.
“I believe it gives us the best of both worlds,” Williams said of Lightfoot’s plan, but acknowledged workers at chain restaurants with lower check averages need further change to provide adequately for their families. “It still leaves a lot of work to be done. We don’t want men and women in our city living below the poverty line.”
Lightfoot’s plan eliminates exemptions to the minimum wage for other workers, including people with disabilities, youth under 18, agricultural workers and people in transitional employment programs.
People with disabilities, for whom there is currently no wage floor if employers get permission from the government, will have to be paid the city’s minimum wage by July 1, 2024. Youths under 18, including those in publicly subsidized programs, who currently can be paid as little as $7.75 an hour, will have to be paid $10 by next year and the full minimum wage by 2025.
Those changes also faced some opposition. Tanya Triche Dawood, vice president and general counsel of the Illinois Retail Merchants Association, said raising the youth wage might exacerbate already high unemployment among teens in parts of the city, as grocers, foodservice operators and other employers that often hire teens won’t have a financial incentive to do so.
“They don’t have experience and they are harder to employ,” she said. “This is a disincentive to employ young people.”
Lightfoot, during a press conference following the council meeting, said the city’s economy will benefit from working families “getting a well earned and well deserved raise.”
“We built the policy the right way, bringing everyone to the table — businesses, community groups and working families alike.”
Greg Kelley, president of SEIU Healthcare, a union representing healthcare workers and leader of a coalition to advocate for a $15 minimum wage, called the new law a victory.
“Today’s action will impact 400,000 working people in the city of Chicago and we are thrilled that they have seen the changes in this city,” Kelley said at the news conference with the mayor.
Ald. Sophia King, 4th, who proposed the initial ordinance calling for an end to the tipped wage as well as a rise to $15 by 2021, also celebrated Wednesday’s vote as a “substantial win.”
Still, she noted that tens of thousands of tipped workers “still lack access to responsible wages” and said she is eager to help craft the economic impact study.
Activists calling for an end to the lower tipped wage said they want to be involved in the economic impact study, to be carried out by the city’s Department of Business Affairs and Consumer Protection, to ensure the experiences of tipped workers are accurately represented, said Nataki Rhodes, lead organizer at Restaurant Opportunities Center Chicago. They are also gauging the appetite among Cook County officials, including commissioner Toni Preckwinkle, who lost the mayoral election to Lightfoot, for a proposal to eliminate the tip credit at the county level, Rhodes said.
Meanwhile, some restaurant owners are experimenting with eliminating the tip credit themselves to try to change what they think is a problematic system.
Derrick Tung, owner of Paulie Gee’s pizza restaurant in Logan Square, started paying his servers at least minimum wage and sharing their tips with kitchen staff in order to narrow the gap between how much they make. He worked as a cook himself and remembers how unfair it felt that on busy nights servers would be making $50 an hour and he would still be making $10.
It is costing him $5,000 more per month and he has trimmed expenses to compensate. He has raised prices by a dollar on some of the most popular items.
For the most part, customers are oblivious to the change and are tipping as much as usual. Kitchen staff has seen their wages go up, which helps with retention, while servers, who were upset about the change, are getting as much as before or a little more.
He benefits from the fact that his restaurant is new and growing. He’s not sure every business could survive such a change.
“It was a little rough to begin with,” Tung said. “But we haven’t lost anyone and they’re all making more. The hard part is changing the mindset.”