CHICAGO — A new ordinance being considered by the Chicago City Council is facing growing backlash from local restaurant owners and industry advocates, who say eliminating the tipped minimum wage could devastate small businesses, reduce employee earnings, and increase menu prices citywide.
The Illinois Restaurant Association (IRA) has launched a public campaign titled “Protect Chicago’s Tips”, urging residents to contact their alderperson and vote against the proposal. The ordinance would effectively abolish the city’s tip credit system, which currently allows restaurants to pay tipped employees below the standard minimum wage — with the requirement that tips make up the difference.
What’s at Stake for Restaurants and Workers
Under the existing system:
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The tipped wage in Chicago is $9.48/hour.
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Employers must ensure total earnings (wage + tips) meet or exceed $15.80/hour, or make up the difference themselves.
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The median wage for full-service tipped workers in Illinois is currently $28.48/hour, according to IRA.
Opponents of the ordinance argue that the current law already protects workers from being underpaid, and that eliminating the tipped minimum wage could lead to:
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Job cuts and reduced employee hours
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Increased menu prices
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A shift toward service fees instead of traditional tipping
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Closure of mid-tier restaurants, similar to what has occurred in cities like San Francisco and Seattle
Survey: 92% of Restaurants Expect Price Hikes
A recent survey of 315 Chicago restaurant operators conducted by the IRA revealed deep concerns about the ordinance:
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92% said menu prices would need to increase
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76% said they would be forced to reduce the number of tipped staff
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66% would need to cut jobs or consolidate roles
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58% would have to reduce employee hours
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A majority estimated their new average profit margin would drop to 1.6%
The IRA also pointed to research showing that eliminating the tip credit in other cities led to lower tip percentages for workers, despite higher base wages. In San Francisco, each $1 increase in minimum wage reportedly raised the risk of restaurant closures by 14%.
Industry Calls for Alternative Solutions
Industry advocates say they’re not opposed to fair wages — but want to avoid one-size-fits-all legislation that could cripple local restaurants. The IRA has proposed working with policymakers on alternative solutions that ensure both worker protections and business sustainability.
The group also warned that blanket changes could undermine the tipping culture, confuse customers, and disproportionately impact family-run establishments still recovering from the pandemic.
As noted in a recent Chicago Tribune editorial, opponents argue the city should “go slow” on changes to tipped wage laws — or risk unintended consequences for both workers and small businesses.
Do you support maintaining the current tipped wage system in Chicago, or do you believe it’s time for a citywide wage overhaul? Share your views in the comments or tell us how this ordinance would affect your neighborhood restaurant at ChicagoSuburbanFamily.com.
