Chicago Is Making a Major Change to Restaurant Wages
What will it mean for the city’s tipping culture?
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According to mayor Brandon Johnson, Chicago is becoming “the most pro-worker city in the country” — and it’s thanks to a major change in the restaurant industry.
Many hospitality workers across the United States, including restaurant servers, bussers, hosts and bartenders, rely on customers’ tips to get by. Employers are permitted to pay their staff as little as $2.13 per hour if tips make up the difference according to the U.S. Department of Labor. If tips aren’t enough, then employers are supposed to pay up to the federal minimum wage of $7.25 per hour.
However, advocates such as the group One Fair Wage argue that employers don’t always follow through, leaving some workers in the lurch. At the same time, many customers view tipping as a bonus, not a requirement. In a YouGov survey conducted in April, of 1,000 American adults, 51 percent thought it was acceptable to leave no tip for “bad service.” In other words, it’s not uncommon for workers in the industry to make far less than the standard minimum wage. According to One Fair Wage, service workers are twice as likely to need food stamps and three times as likely to live in poverty compared to workers in other industries.
Chicago’s government is aiming to tackle all this. On July 1, the city’s tipped minimum wage went from $9.48 per hour to $11.02, and it will gradually continue to increase over the next five years until it matches the standard minimum wage, which was just raised to $16.20. This means that restaurant operators will need to pay their employees a higher baseline, rather than counting on customers to tip.
While Chicago is the latest and largest city to implement this sort of policy change, it isn’t the first. Washington D.C. has been taking a similar approach to raising its wages since last year. The district plans to phase out its tipped minimum wage by 2027, also by slowly increasing it to match the standard. The process began in May of 2023, with the latest pay bump (from $8 to $10 per hour) also coming on July 1.
Meanwhile, in California, a policy battle over restaurant service fees is causing frustration for restaurant operators, workers and customers. Instead of relying on tips, many California restaurants tack on a 20 percent surcharge to every bill. This allows them to keep menu prices down, but customers often feel ambushed and angered by the extra fees. According to the same YouGov survey, 70 percent of Americans across the country thought such fees were unacceptable.
It’s unclear how this wave of new policies will play out, but we’re curious to see this is the start of change in U.S. restaurant tipping culture. If restaurant operators pay their employees more, will tipping truly become a bonus, or will it remain an expectation?
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