Dive Brief:
- Chicago Mayor Brandon Johnson said he would veto a measure passed by the city council that freezes Chicago’s stepwise elimination of the tipped subminimum wage at a Wednesday press conference.
- Johnson didn’t say when, precisely, he would veto the measure.
- The city council voted 30 to 18 on Wednesday to stop the elimination of the city’s tip credit. The bill passed Wednesday caps the tip credit at 24% of the city’s minimum wage, meaning the tipped minimum wage is $12.62 an hour.
Dive Insight:
The National Restaurant Association, which views the preservation of the tipped subminimum wage as a key political priority, celebrated the passage of the bill and warned against the Mayor’s potential veto.
“We are disappointed that Mayor Brandon Johnson is threatening to continue the policy that is causing his city so much pain,” said Mike Whatley, vice president of state affairs and grassroots advocacy for the NRA. Whatley said the partial elimination of the tip credit had damaged the industry.
The Illinois Restaurant Association issued a statement thanking the alders who spearheaded the passage of the ordinance, and stated that the IRA would continue to work to preserve the tip credit.
Johnson claimed that the number of licenses for foodservice locations rose since the passage of stepwise elimination of the tip credit, which would imply growth in the sector. The measure, which was a compromise between the city and the restaurant industry, cut the tip credit by 8% per year until July 2028, when the minimum wage for tipped workers would reach the city’s full minimum wage.
The NRA shared a statement criticizing the use of foodservice establishment licenses as a proxy for restaurants and claimed that about 17% of Chicago foodservice establishments didn’t renew their permits.
In a separate press release, before the vote, the IRA claimed the elimination of the tip credit resulted in closures, stagnant employment and increased prices.
Bureau of Labor Statistics data aggregated by the Federal Reserve Bank of St. Louis showed a slight decline in seasonally adjusted full-service restaurant employment in the Chicago region after the first stepwise reduction in the tip credit in 2024. However, the data does not continue into 2025.
Chicago joined Washington, D.C., in reversing course on the tip credit. D.C.’s city council twice overrode the will of its voters to preserve the tipped subminimum wage. The political battle in D.C. over the tipped subminimum wage is continuing, however, with local labor groups pushing for a major hike in the overall minimum wage and another ballot initiative to end the tip credit.
While contemporary efforts to kill the tip credit have largely failed thanks to industry opposition, there are seven states, including California, where the minimum wage for tipped workers is the same as the overall minimum wage.
