Chicago Eliminates Tipped Minimum Wage

On the heels of the motion, the National Restaurant Association sheds light on the impact seen in Washington, D.C.

October 9, 2023

Photo Courtesy of Max Bender on Unsplash

The Chicago City Council voted Friday, Oct. 6, to eliminate the tipped wage for restaurant servers by July 2028.

I’m extremely proud of this fight for our tipped workers, whose hard work often goes unsung in the restaurant industry,” wrote Mayor Brandon Johnson in a social media post. “Through this ordinance, they will finally earn what they have long deserved: a consistent livable wage.”

The National Restaurant Association, however, shares a different outlook—one it says it’s seen play out in its own backyard, where tipped minimum wage increases began this year. Under the passage of Initiative No. 82 in Washington, D.C.—where the National Restaurant Association is headquartered—the tipped minimum wage increased to $8 in July, and is set to increase annually to match the minimum wage of non-tipped employees in July 2027.

A recent survey carried out by the National Restaurant Association suggests that local dining habits have changed as a result. “One-third (32%) have been seeking dining options outside the city in Maryland and Virginia to avoid restaurants with increased menu prices and automatic service charges,” states the association.

Further, they say, 52% of those surveyed said they are eating at home more as a result of the cost increases at city restaurants.

The Illinois Restaurant Association, in partnership with CorCom, carried out an August 2023 survey of 315 restaurant owners who employ tipped workers, and says 77% of operators anticipated that the elimination of the tip credit would have a “very negative” impact on their operations. “To offset the financial impacts of the tipped minimum wage increase and the elimination of tip credit, a majority of restaurants say they will raise menu prices (80%), reduce staff or consolidate positions (66%) and reduce employee hours (58%),” according to the survey.

States requiring employers to pay tipped employees a full state minimum wage before tips are Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, with specifics varying from state to state, as a table from the U.S. Department of Labor shows.