Chicago’s tipped workers get pay raise on July 1 as part of One Fair Wage ordinance

CHICAGO — Tipped workers in the city are about to get a pay raise under Chicago’s One Fair Wage ordinance, which supporters hope will spread statewide.

Mayor Brandon Johnson and other supporters of the measure say they’re doing a victory lap Monday over the measure that helps those who make less than minimum wage, typically tipped workers at bars, restaurants and other serving establishments.

The One Fair Wage ordinance passed through City Council in October 2023 and phases out the city’s subminimum wage — $9.48 per hour at the time the ordinance was passed — until all service workers are guaranteed Chicago’s full minimum wage. Also under the ordinance, Chicago’s full minimum wage for all workers will increase to $16.60 per hour starting July 1.

The One Fair Wage ordinance is being implemented over the course of five years, with tipped workers receiving a wage increase of 8% per year until they reach minimum wage, On July 1 of this year, tipped workers in Chicago will see their pay increased up to $12.62 per hour.

Johnson says the subminimum wage is an outdated system that has its roots in slavery and disproportionately affects brown and Black workers, especially women.

“There is no place for an antiquated system such as this, particularly in a great global city,” the mayor said at a press conference Monday.

But some restaurants in Chicago say they’ve had to let some of their staff go due to the higher wages, and others are charging customers more to make up the difference.

Ald. Jessie Fuentes (26th Ward) spearheaded the efforts behind bringing the One Fair Wage ordinance info effect in the city and said it’s paying off. He cites a new report that shows businesses are adapting to their higher costs.

“Do restaurants have to create a system change to achieve this if they weren’t paying minimum wage to begin with? Absolutely,” Fuentes said Monday. “They do things like look at their menu items.

“… Every owner, depending on their design and business model, (is) making different tweaks and changes to achieve that.”

The Illinois Restaurant Association, however, disputes the report’s findings and says the One Fair Wage ordinance is hurting the restaurant industry in Chicago, telling WGN News in a statement:

“It is an incredibly difficult time for restaurants. Many are struggling to stay open. The policy is pushing independent restaurants to the brink, driving up prices for consumers and putting thousands of tipped employees out of jobs.”

Sam Toia, the organization’s president, said the ordinance is a solution to a problem that doesn’t exist.

“All you got to do is look it up and down Lincoln Avenue, Clark Street, 53rd Street in Chicago and you will see empty storefronts,” he said.

Toia pointed to the mayor of Washington, D.C., who is trying to repeal a similar ordinance that began a year ahead of Chicago’s. He said Chicago should “put a pause” on its measure, a notion supported by The Employment Policies Institute.

“A lot of folks are saying, ‘we tried this, it’s not working. We are after two years implementation, it’s lead to  income loss, in turn over a restaurant and a restaurant closing,'” said research director Rebekah Paxton.

And while some on Chicago’s city council, like Ald. Bennett Lawson (44th Ward) agree the ordinance isn’t living up to its promise, One Fair Wage supporters vow to expand it. 

The city is hosting webinars on business education this week.