Mayor Lori Lightfoot’s plan to raise Chicago’s minimum wage to $15-an-hour by 2021, but maintain a “sub-minimum wage” for tipped workers, cleared a key legislative hurdle on Monday to cheers from restaurant owners.
Illinois Restaurant Association President Sam Toia said the “pragmatic” mayoral compromise advanced by the City Council’s Budget Committee “balances the needs of hard-working Chicagoans” struggling to make ends meet with “neighborhood businesses that drive our economy.”
“Maintaining the tipped wage allows severs and bartenders to maximize their earnings while keeping labor costs down for operators and prices reasonable for consumers,” Toia said, arguing that restaurants operate on a narrow profit margin of 3% to 5%.
“By taking a reasonable approach to the $15-an-hour minimum wage that preserves the tipped wage, the City Council will allow restaurants to continue to grow and invest in our communities.”
Toia noted that “all workers are required by law to reach minimum wage.” If tips don’t make up the difference for tipped workers, currently guaranteed $6.40-an-hour, employers must, he said.
“We support strong enforcement and condemn bad actors,” Toia said, noting that only 12 minimum wage violation complaints were filed with the city’s Department of Business Affairs and Consumer Protection last year — and only three this year.
Ethan Sampson serves as vice-president and deputy general counsel of Lettuce Entertain You, whose 1,400 tipped employees currently average $31-an-hour.
Eliminating the lower wage “could jeopardize the tips that tipped workers rely on,” Sampson said.
“They’re currently losing tips to delivery services. That’s a growing part of our business. Price inflation could potentially drive diners out of our doors.”
Ryan Marks, owner/operator of the Legacy Hospitality Group, noted his company is “family-owned with no investors.”
“Eliminating the tipped credit, the tipped minimum wage would be devastating to our bottom line. And potentially put others under,” Marks said.
“This would grossly reduce the income of our tipped employees as patrons are sure to reduce their tipping altogether. We ... would be forced to cut our labor and our employee benefits to survive. Additionally, lack of tips removes the motivation, drive and reward to go above and beyond in providing great service.”
On the day she introduced her 2020 budget, Lightfoot threw a bone to progressive aldermen upset about her failure to re-open six shuttered mental health clinics and use revenues generated by a stalled graduated real estate transfer tax to reduce homelessness and build affordable housing.
The mayor agreed to raise Chicago’s minimum wage to $15-an-hour minimum wage by 2021— four years earlier than the state — and include the increase in a sweeping management ordinance tied to her first budget.
On Monday, both the budget and the management ordinance were advanced to the City Council floor, setting the stage for a final vote on both next week.
Under the mayor’s plan, Chicago’s $13 minimum hourly wage would rise to $14 on July 1, 2020 and $15 the following year. After that, minimum-wage workers would be guaranteed annual increases capped at 2.5% and tied to the consumer price index.
The increase would apply to city workers and other agencies of local government under the mayor’s control.
Employees under the age of 18 would also get to $15-an-hour, but more gradually. They would start at $10-an-hour in 2020 and reach $15-an-hour by 2024. In 2025, Chicago would abolish its minimum wage exemption for teen workers.
The guaranteed hourly wage for tipped workers—many of whom are black and Hispanic women working at the lowest levels of the restaurant industry — would rise from $6.40 to $8.40 next year; $8.40 is 60 percent of $15, and it would remain at that percentage.
Small businesses with 20 or fewer employees would have an extended timeline. Their minimum wage would rise by 50 cents-an-hour next year and reach $15-an-hour by 2023. Businesses with fewer than four employees would be exempt altogether.
That’s not good enough to satisfy Ald. Carlos Ramirez-Rosa (35th). He argued again Monday that eliminating the “sub-minimum wage” and phasing in a $15-an-hour wage for all workers was imperative to “reduce workplace sexual harassment” and eradicate a two-tiered system that “leaves black and Latino women in the service industry behind.”