Chicago Progressives Voted To Freeze Minimum Wage Hikes for Restaurant Workers. Why Won't the Mayor Listen?
· Reason
In recent years, the progressive left has pursued a systematic effort to apply the traditional minimum wage to restaurant workers. The latest battleground for this fight has become Chicago, where the progressive city council recently bowed to economic reality and voted to freeze another pending minimum wage hike for restaurant employees in the city. Chicago Mayor Brandon Johnson, however, has responded by vetoing the measure and is instead doubling down on the Windy City's pro–minimum wage and anti-tipping regime.
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At the center of the Chicago fireworks is an ongoing progressive effort to eliminate what's known as the tipped-wage credit for restaurant and hospitality workers. The tip credit allows these workers to be paid below the minimum wage—but with the backstop that their tips must make up the difference. Once the tip credit is repealed, servers then need to be paid a traditional minimum wage upwards of $15-20 per hour, just like any other industry.
The Chicago City Council passed the "One Fair Wage Ordinance" in 2023, eliminating the tipped wage and requiring restaurant workers receive gradual annual raises until they reach the full minimum. The council's recent about-face would have stopped those increases at where the tipped wage currently sits in its upward trajectory: 76 percent of the city's $16.60 minimum wage. Washington, D.C. was the first major American city to repeal its tip credit regime in 2022; the push has continued via the efforts of One Fair Wage, a progressive organization that seeks to eliminate the tip credit nationwide.
While nixing the tipped wage may sound like a win on paper for waiters, the results are disconcerting. Restaurants in cities that have adopted the measure have naturally seen sudden explosions in labor costs—inevitably prompting staff cuts and price hikes (not to mention 10-20 percent "service fees" showing up on customer tabs).
Workers also came out worse. D.C. saw close to a 5 percent decline in full-service restaurant jobs in the city and the average server lost over $1,800 annually in take-home pay after the elimination of the tip credit. Total tipped worker earnings in D.C. dropped by nearly $12 million, according to data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages. The reason behind these declines was not only the top-line decrease in restaurant jobs but the reality that many restaurants cut hours even for those workers who did manage to keep their jobs.
"We're watching a beloved bar back, a beloved busser, a dishwasher have their jobs taken away," D.C. restaurant worker Valerie Graham told Reason in 2024. "Not because our owner-operator is an evil billionaire but because they're an independent business owner who had to make some business decisions and there's a callousness with which our industry is talked about."
The amount of tips many waiters received also likely fell. Service fees "have decreased my average tip percentage from 23-25% to 18-20%," wrote another D.C. restaurant worker, Yana Tarakanova, in the D.C.-centric publication The 51st. "Customers are simply not willing to tip more than that when they're already paying an additional 5% fee. And who can blame them?" This is unsurprising given that research from the Census Bureau has demonstrated that for every $1 increase in the mandated minimum wage for a tipped employee, there's a correlating drop in tips of the same amount.
Given that tips are now tax-free—where as the traditional minimum wage is not—many restaurant servers ended up in a worse position economically in the aftermath of a minimum wage hike.
Chicago's experience has largely mirrored that of D.C.'s. Restaurants in the Windy City have resorted to raising prices in the face of the minimum wage hike and tip credit repeal. Over the past year, the Illinois Restaurant Association has reported that 89 percent of restaurants in the city have raised menu prices while 79 percent have cut worker hours.
"With rising labor costs, I'm considering switching to QR-code ordering just to afford operating," said Jessica Perjes, the owner of a restaurant on the northwest side of Chicago. "That means fewer service jobs and less hospitality. Eliminating the tip credit like this won't increase our servers' earnings—it will reduce opportunities."
Despite both Chicago restaurants and the progressive city council now wanting to reverse course, Johnson rejected the minimum wage freeze. The vote was "tone deaf," the mayor said, adding he "will not allow our progress to be put on pause." The council appears to lack the votes to override Johnson's veto, meaning the tip credit elimination and wage hike will continue as planned.
While Johnson claims he's acting in the interest of protecting wages for workers, the economic evidence suggests he's doing the opposite.
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