Waitress Luisa Estrada takes an order from customers at Alexander's Restaurant in North Center Dec. 19, 2022. Credit: Alex V. Hernandez/Block Club Chicago

CHICAGO — Tipped workers at restaurants and other Chicago businesses will no longer make a “subminimum wage” thanks to legislation that passed City Council Friday — although the changes will gradually take effect over the next five years.

Chicago’s minimum wage for most workers is $15.80 an hour. But tipped workers like restaurant servers can be paid a subminimum wage, a base pay that ranges from $9 an hour for employees at smaller companies to $9.48 for those at larger ones, which are bolstered by on-the-job tips. 

Employers are legally required to make up the difference for tipped workers whose hourly wages and tips do not reach the full minimum wage.

But the “One Fair Wage” ordinance introduced this summer and passed by City Council Friday with the support of Mayor Brandon Johnson does away with that system.

Under the measure, wages for tipped workers will rise 8 percent on July 1, 2024. They will then rise 8 percent each year until meeting the city’s full minimum wage in 2028, with any tips paid out on top. 

Alderpeople voted 36-10 in favor of the ordinance during a special City Council meeting Friday.

Alderpeople voted 36-10 Friday to gradually phase out the subminimum wage for tipped workers Credit: Provided

After initial opposition to the bill from the Illinois Restaurant Association, the association’s president Sam Toia struck a compromise last month with the legislation’s City Council backers.

Toia’s group in September had proposed its own version of the ordinance which would have required servers to earn at least $20.54 an hour in wages and tips at restaurants that make over $3 million in annual revenue. Wages for workers at smaller restaurants would have remained unchanged.

But Toia told Block Club he was told that proposal was “dead on arrival,” so he began pushing for a five-year phase-in to give restaurant owners more time to accommodate the change.

“I just felt that was the best we’re gonna get out of this,” he said in September. “So with the five years, [restaurant owners] can at least ease into it instead of doing it all overnight.”

The revised ordinance was then passed 9-3 by the Council’s Workforce Development on Sept. 20. A final Council vote was originally planned for Wednesday’s full City Council meeting, but was delayed until Friday after the City Clerk’s office accidentally missed the deadline to get the legislation on the agenda.

State law requires that the public have at least 48 hours’ notice before a legislative body can take final action on a measure.

Ald. Jessie Fuentes (26th) at a City Council meeting at City Hall on June 21, 2023. Credit: Colin Boyle/Block Club Chicago

Alderpeople mostly spoke in favor of the ordinance during Friday’s special Council meeting, often invoking personal stories of themselves or family members who had earned less than the minimum wage while working in tipped jobs.

Ald. Daniel La Spata (1st) shared his experience earning a subminimum wage during his time working at Red Lobster. He said the current struggles of tipped workers dealing with high rates of sexual harassment at work, as well as homelessness, was “unacceptable.”

“I am not so desperate for a cheaper chicken sandwich that I need to balance my bill on the backs of your poverty. I don’t need to live like that. You don’t need to live like that,” he said. “I am happy to pay incrementally more, because it’s incrementally more we’re talking about, so you don’t have to live in poverty.”

Ald. William Hall (6th) invoked his grandfather, who he said worked as a tipped worker and would give Hall and his other grandchildren coins he earned at work for their birthdays.

“Whether you start on 79th Street or Rush Street, this vote is a dignity vote. Everything has gone up, the cost of food has gone up, the cost to go to work has gone up, so therefore the cost to live has gone up,” Hall said. “So workers should never have to figure out how to make $1 out of 15 cents. So may this be the day that everybody in Chicago sees that we are all in this together.”

Ald. Desmon Yancy (5th) shared a story about a friend who worked as a tipped worker at O’Hare Airport at the same time Yancy worked in retail, but made significantly less than he did.

“I was working in retail and he was working at O’Hare, had a much longer commute than I did, was raising a newborn baby girl and was making half the money that I made,” Yancy said. “All because he chose a career in which he was paid tipped wages instead of what I would call fair wages. So when I think about how important this work is to really raise the floor for all workers, it is nothing but honor that I have to be able to stand in support for this ordinance.”

The City Council meets on Oct. 4, 2023 Credit: Jim Vondruska/Block Club Chicago

A handful of alderpeople spoke out against the measure Friday. Alds. Anthony Beale (9th), Bill Conway (34th), Gilbert Villegas (36th) and Bennett Lawson (44th) were not present for the vote.

Ald. Nicole Lee (11th), whose ward includes Bridgeport and Chinatown, said she’s heard from business owners that One Fair Wage would hurt small, family-run restaurants who are already struggling to make ends meet.

The restaurant industry “is the lifeblood of our community and brings a lot of tax revenue to the city as well,” she said. “And my constituents there feel that this is going to hurt more than it’s going to help our local economy.”

Those sentiments were echoed by Ald. Nicholas Sposato (38th), who called the ordinance a “job killer” that would lead to higher prices and fewer positions at restaurants across the city. He said that would be especially true in “border wards” like his where diners would instead choose cheaper options in the suburbs.

“I cannot agree with the majority of my colleagues,” Sposato said. “Restaurants are going to be cutting jobs. They’re going to be raising prices. They’re going to be hitting you up with service charges. So, workers will not do better when businesses close. So this is a job killer, a business killer.”

Ald. Brian Hopkins (2nd) also voted against the measure, predicting it will lead to more restaurants instituting automatic service charges, which will then be taxed and split among all restaurant employees, not just front-of-house tipped workers.

Closing out Friday’s meeting, Ald. Jessie Fuentes (26th), the One Fair Wage ordinance sponsor, rebuffed those criticisms.

“The sky is not going to fall,” the Humboldt Park alderperson said, referencing earlier comments made by La Spata.

Speaking directly to Johnson, Fuentes commended his efforts to broker a compromise ordinance that would be “good for everybody,” by extending the phase-in period.

“This ramp up will allow us to do just that. To give our workers a raise every year, but allow our employers to do it in a way that makes sense to their finances so that they can pay folks the minimum wage and make a profit,” she said.

Chicago is now the country’s largest city to independently phase out subminimum wages for tipped workers, according to the Tribune. California does not allow subminimum wages statewide.

Block Club’s Melody Mercado contributed.

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