Lightfoot proposes minimum wage boost for tipped workers’ pay
Mayor Lori Lightfoot unveiled a plan Wednesday to raise Chicago’s minimum wage to $15 an hour by 2021 and raise — but not eliminate — the subminimum wage earned by restaurant servers and other tipped workers.
Workers who receive tips currently may be paid as little as $6.40 an hour so long as their tips bring them up to the city’s minimum, which now stands at $13 an hour. Lightfoot proposed raising the subminimum wage for tipped workers to $8.40 next year and will revisit the issue as her administration studies the economic impact of tipped wages.
Lightfoot’s plan also would eliminate exemptions to the minimum wage for many workers, including people with disabilities, youth under 18, agricultural workers and people in transitional employment programs.
Her proposal, introduced Wednesday as part of the 2020 budget, drew opposition from the City Council’s Progressive Reform Caucus, which supported another proposed ordinance, introduced this summer by Ald. Sophia King, 4th, that would have eliminated the tip credit and required tipped workers be paid at least the regular minimum wage by 2023.
Restaurant industry groups pushed back hard against that proposal, saying it would be fatal to restaurants’ business models. King’s proposal also would have raised the minimum wage to $15 an hour by 2021, four years ahead of when the state will get to that
Dan Lurie, Lightfoot’s chief of policy, said raising the floor on tipped wages to $8.40 an hour was what the mayor thought was the best way to handle the issue.
“We didn’t do this under duress. This wasn’t an attempt to split the difference between two sides,” Lurie said.
Lightfoot decided that gradually ramping up the tipped minimum wage to $15 would be “too dramatic” a change, particularly for small restaurants. “It’s a capacity problem. We want small restaurants to budget and plan for this,” Lurie said.
The mayor’s proposal directs the city’s Department of Business Affairs and Consumer Protection to study how tipped wages are enforced in Chicago next year.
“She wants to get (to $15),” Lurie said. “This is not something she’s walking away from.”
Lightfoot’s announcement disappointed advocacy groups that have pushed to eliminate the subminimum wage for tipped workers, a system they say keeps people in poverty, makes it difficult for workers to push back against sexual advances and disproportionately affects black women.
“So far it seems that the mayor is siding with the Illinois Restaurant Association,” said Nataki Rhodes, lead organizer with the nonprofit Restaurant Opportunities Center of Chicago. She added, “We thought that the mayor was going to be a progressive mayor.”
While servers at higher-end restaurants can make a lucrative living on gratuities, many tipped workers at small or inexpensive restaurants or in poorer neighborhoods face financial challenges. 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.
The Illinois Restaurant Association applauded the mayor’s plan.
“We must have balance between the needs of hard-working Chicagoans and the neighborhood businesses that drive our economy,” Sam Toia, president and CEO of the industry group, said in a statement. “This ordinance takes a pragmatic approach to a $15 minimum wage by maintaining the tip credit for employers, which will protect jobs while keeping costs reasonable for both restaurants and diners.”
But Ald. Carlos Ramirez-Rosa, 35th, a member of the Progressive Reform Caucus pushing to increase the tipped wage to $15, said the proposal “might actually hurt small restaurants more than the gradual increase we’ve been calling for.”
Ramirez-Rosa said community groups are studying Lightfoot’s proposal. They may introduce an amendment in coming weeks to the part of the 2020 budget package that will include the minimum wage ordinance, he said.
Rhodes said her group plans to ratchet up pressure on the mayor and aldermen and may introduce a proposal to eliminate the tip credit at the county level.
Meanwhile, Lightfoot’s plan proposes increasing the city’s minimum wage to $14 an hour next year and $15 the year after. 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 would require the city’s minimum wage be applied to several groups of people who are currently exempt.
People with disabilities, for whom there is currently no wage floor, would have to be paid the city’s minimum wage by 2024. Youths under 18, including those in publicly subsidized programs, who currently can be paid as little as $7.75 an hour, would have to be paid $10 by next year and the full minimum wage by 2025.