Compromise reached on sub-minimum wage; Mayor Johnson gives restaurants 5 years to phase in higher pay for tipped workers

Mayor Brandon Johnson on Monday signed off on a compromise that will deliver on his campaign promise to eliminate the “sub-minimum wage” for tipped workers while appeasing Chicago restaurants by giving them five years to swallow the 66 % increase in labor costs.

The agreement was reached after Johnson and his City Council allies shot down the Illinois Restaurant Association’s eleventh-hour proposal to raise the minimum wage for tipped workers to $20.54-an-hour, but only at restaurants with more than $3 million in annual revenue.

Only after being told that proposal was dead on arrival did Sam Toia, president of the restaurant association, accept the five-year phase-in. A still-pending ordinance introduced in June by Johnson’s City Council allies includes a two-year phase-out.

A substitute ordinance including the five-year phase-in is scheduled for a vote at Wednesday meeting of the City Council’s Committee on Workforce Development.

It calls for tipped workers — currently paid 60% of Chicago’s minimum wage — to receive 8% annual increases beginning on July 1, 2024, until they reach 100% parity on July 1, 2028.

Even with the longer runway, Toia remains concerned increased labor costs will force family-owned neighborhood restaurants to reduce hours or eliminate jobs. But he’s also a political pragmatist.

“The train was leaving the station. I know how to count votes. I counted the votes,” Toia told the Sun-Times.

“I definitely think it could lead to some job loss. But it’s much easier for restaurant owners/operators to bake this into their budget over five years than over two years.”

Toia commended the mayor for his willingness to compromise, even though he clearly had the votes.

“I will say this about Mayor Johnson and his team: They communicated. They listened. They will communicate all day long, all night long. There was a lot of communication going on over the last 48 or 72 hours all the way into the late night. … They did start at two years. Less than 24 hours ago, I’m still hearing, ‘You’re lucky to get three,’” Toia said.

Ald. Carlos Ramirez-Rosa (35th), the Zoning Committee chair who doubles as Johnson’s floor leader, said the mayor agreed to the five-year runway, even though he had the votes for a two-year phase-in.

Johnson applied the same, collaborative approach to his revised proposal to raise the real estate transfer tax to generate $100 million in annual revenue to combat homelessness, but in a way that reduces the transfer tax for homes sold for less than $1 million.

“This is happening because this mayor is an organizer and he’s a convener. … The mayor is looking for ways to bring people together on every issue. So he’s gonna lead on his values. He’s gonna deliver the things that he campaigned upon. But he’s gonna do it in a way that’s collaborative and listens to all stakeholders,” Ramirez-Rosa said.

“This is really about making sure that some of the most vulnerable workers have a floor that is more dignified and just. This administration is committed to helping Black women, helping Latinas, helping workers that sometimes face harassment in the workplace because they live off of tips, helping workers who are sometimes victimized by wage theft. We know that by having one fair wage with tips on top that restaurant workers will be better off. And we’re just so happy that we were able to find this common ground to accomplish this in a way that was collaborative and unifying for our city.”

The restaurant industry also had suggested raising the minimum wage for tipped workers but only in large restaurants. That offer also included tripling fines for restaurants that thumb their noses at the mandate to make up the difference whenever tipped workers — now paid $9.48-an-hour — don’t make enough tips to reach the $15.80-an-hour that applies to all other Chicago workers.

Why not impose a simple crackdown on those “bad actors” as Toia’s group had suggested?

“You will only know that it’s happening if there’s a complaint. And oftentimes, workers in restaurants are not likely to bring forward these complaints because some of them may be undocumented. Some of them may be older. Some of them may be living paycheck-to-paycheck and thinking, ‘I’m not making the full minimum wage. But if I report my employer, maybe I’ll lose my job. Maybe they’ll fire me. Maybe, it’ll be harder for me to get another job at another restaurant,’” Ramirez-Rosa said.

The mayor’s office released a statement calling the Johnson-forged compromise a “huge step forward in delivering a fair wage for workers, many of whom are Black and Brown women who are heads of households and anchors of their communities.”

Ald. Jessie Fuentes (26th) could not be reached for comment on the compromise.

On the day Fuentes introduced the two-year phase-out, she had said she was open to four years, but no more.