March 04, 2024

Eye On Illinois: Tipped wage elimination may return to Statehouse stage

As goes Chicago, so goes the state.

That sentence opened the Sept. 21 column exploring the city’s Workforce Development Committee consideration of a proposal to eventually abolish the currently legal subminimum wage for people working for tips.

The full City Council approved its One Fair Wage Ordinance the following month, and as Capitol News Illinois reported Wednesday, that accomplishment has advocates back in Springfield pushing for a statewide change.

Under the Chicago plan, the base wage for tipped workers will increase 8% yearly until it reaches the city’s regular minimum of $15.80 per hour. The city’s minimum wage increases annually by the smaller of either 2.5% or the rate of the consumer price index, so it should take about five years to eliminate the difference. (The current statewide minimum is $14 for adults and $8.40 for tipped workers, those numbers will move to $15 and $9 on Jan 1.)

This puts the city ahead of national trends. The U.S. Department of Labor reports Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, as well as Guam, also require full state minimum wage for all workers.

Of those states, the lowest minimum wage is Minnesota’s $8.63, which applies to “small employers,” defined as those with gross annual revenues of less than $500,000. The greatest is Washington’s $15.74. (The only bigger minimum wage is $17 in Washington, D.C.)

The Illinois Restaurant Association didn’t oppose the Chicago plan, apparently because the five-year schedule seemed a reasonable time for everyone to accommodate to a new reality. Presumably any state legislation would need a similar ramping schedule in order to avoid heavy opposition. But that doesn’t preclude individual proprietors from voicing displeasure, pledging things like job cuts and price hikes.

Some diners might focus on bottom-line impact. If I spend $25 at dinner and tip $5, I wouldn’t feel differently about paying $30 with no gratuity. Other customers might blush at a $5 increase in the published price of food, regardless of if their total stays flat. Further, if listed prices increase at establishments with tipped servers, it’s easy to envision correlated increases at tip-free quick service joints – absent the guarantee the difference funnels down to workers.

Consumer habits are entrenched, and there are many tipped professions outside restaurants. Lawmakers would be wise to pair any changes with mandated language on receipts and menus – across all businesses – to ensure buyers know how their gratuities are allocated.

Most of us want hard work rewarded with fair pay, but we disagree widely on defining “fair” and compulsory participation in that compensation structure. Chicago’s experiment can give Illinois a blueprint, but lawmakers may be inspired to act before seeing how the city’s change affects the marketplace for workers and consumers.

• Scott T. Holland writes about state government issues for Shaw Media. Follow him on X, the platform formerly known as Twitter, @sth749. He can be reached at sholland@shawmedia.com.

Scott Holland

Scott T. Holland

Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.