Eye On Illinois: Food service industry will be watching Chicago tipped wage plans

As goes Chicago, so goes the state.

That’s not universally true, but there are enough historical examples of urban policy expanding across the rest of the map to warrant taking notice when new ideas surface.

Consider this week’s news that Mayor Brandon Johnson, in partnership with City Council allies and restaurant business leaders, are backing an ordinance that would effectively abolish the currently legal subminimum wage for people working for tips.

The current minimum wage in the city is $15.80 per hour (compared to the statewide $13 minimum for adults). Tipped employees earn a base $9.48 hourly rate (the state level is $7.80). The proposal would eliminate that difference within five years, even as the city minimum increases by the smaller of either 2.5% or the rate of the consumer price index.

Although this column was due before the city’s Workforce Development Committee considered a preliminary vote Wednesday, the topic remains ripe if only because Johnson is new on the job and seems committed to enacting such reforms in some fashion.

Yet it would seem wrong to convey the change as imminent or inevitable. As the Chicago Tribune’s Alice Yin reported, Los Angeles doesn’t allow subminimum wage for tipped workers, but that’s because of a state law and not something the city enacted independently. The U.S. Department of Labor reports Alaska, 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.)

In Chicago, tipped workers who show income from gratuities fell short are guaranteed $15.80 per hour from large employers and $15 from smaller companies. But that arrangement continues to put the onus on service industry workers in ways that don’t apply to other fields, one of several difficulties for restaurateurs struggling to recruit and retain quality labor.

Although the Illinois Restaurant Association isn’t opposing the plan – largely due to the five-year phase-in – the industry at larger reliably argues increasing labor costs results in fewer job opportunities, menu price hikes or both. Individual proprietors often have more colorful ways of expressing the sentiment, and even if you, the patron, aren’t following the story in Chicago, rest assured the folks who own your nearest diner are well aware.

Also surely paying attention are lawmakers who understand how this issue plays with voters and the way it dovetails with other pro-labor reforms. I’m not bold enough to predict when this change could take effect statewide, but the discussion is on the table.

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