Restaurant owner Dave Bonomi said he’s been forced to eliminate jobs at his three restaurants after Chicago’s ordinance to phase out the subminimum wage for tipped workers took effect last year.
“We eliminated almost 20 positions between our three restaurants. We had 64 and now are down to 45, mostly because of it,” said Bonomi, who owns Peanut Park Trattoria on Taylor Street and Coalfire, which has two locations.
Now, Bonomi and other Chicago restaurant owners, along with the Illinois Restaurant Association, are pushing to have the law repealed. They’re following the lead of Washington, D.C., Mayor Muriel Bowser, who earlier this month introduced a budget agenda that included plans to repeal a similar law that took effect in 2023.
“A lot of conversations are going on with our members and Chicago City Council members because we just saw what happened in D.C.,” Sam Toia, CEO of the Illinois Restaurant Association, said, referring to the repeal effort.
Chicago’s ordinance, dubbed One Fair Wage, was approved by City Council in 2023 and took effect July 1, 2024. It gradually increases the minimum wage for tipped workers from $9 per hour to $16.20 over five years.
At Wednesday’s City Council meeting, Ald. Bennett Lawson (44th) introduced a proposed ordinance that would stop the phase-out of the subminimum wage dead in its tracks.
“I actually had both ready to go: A repeal and a pause, knowing full well that they would both be sent to Rules,” Lawson said, referring to the committee where legislation opposed by the mayor routinely goes to die. “So, I thought, ‘I’ll go with the pause and at least that starts the conversation about what’s happening with the industry.’ There’s some unintended consequences.”
Lawson was right. His “pause” was shunted off to the Rules Committee, at least slowing it down by adding an extra step to the legislative process.
Lawson acknowledged that it’s “very hard for any politician to admit they did something that didn’t work.”
“Practically speaking, this could be vetoed. … But, if my colleagues see that the damage is happening in their neighborhoods, we may not have a choice” but to override a first mayoral veto, he said.
Ald. Mike Rodriguez (22nd) chairs the Workforce Development Committee that approved One Fair Wage and vowed to fight hard to continue it.
“Paying people more is good for our economy. We see that in any kind of minimum wage increase,” Rodriguez told the Sun-Times. “Workers shouldn’t have to be the ones that are paying for Donald Trump’s policies. To say that we’re okay with people earning less than the minimum wage does not make sense to me.””
Mayor Brandon Johnson counts phasing out the subminimum wage for tipped workers as one of the signatures wins on his progressive agenda. His office said in a statement that there are no plans to change the law.
“There are over 60,000 workers in Chicago who will see their base pay increase over the next four years as a result of this ordinance,” the statement said. “The majority of these workers are Black and Brown women. Mayor Johnson is proud that Chicago is the largest city to independently abolish the sub-minimum wage.”
Yet the changes have made operating a restaurant harder than ever, according to Donnie Madia, partner at One Off Hospitality. The company employs nearly 800 people and operates several restaurants including Avec, The Publican and Big Star.
“These two drastic changes sent shockwaves through our industry. It was a little hard to take on those changes and the costs associated with those changes,” Madia said.
The first wage increase last year went from $9.48 per hour to $11.02, with annual 8% increases until 2028, when tipped workers’ wages will match the city’s standard minimum wage. The second increase takes effect in July.
Since being implemented, some restaurant owners have said the law has forced them to either cut staff or stop hiring, raise prices and in some instances, close altogether, according to Toia.
“Between July 1, 2024 and Dec. 31, 2024, when tip credit elimination began, Chicago restaurants lost 5,200 jobs,” he said, noting that it’s the latest data the organization has.
Nataki Rhodes, a former server and bartender who now works for the national advocacy group One Fair Wage, said she often didn’t make enough tips to match the minimum wage, and business owners she worked for didn’t make up the difference.
While she said restaurants are facing higher costs, she says they’re using it as an excuse to not implement a pay increase and said tipped workers also have to deal with rising costs.
“Workers feel inflation. Workers feel the impact of tariffs. When you buy eggs or gas, [stores] don’t lower the price if you work on tips,” Rhodes said.
She said the pandemic presented a hardship for many restaurants, but there’s often new excuses from owners over why they can’t increase wages.
“When is the time right to raise wages?” she said. “You can’t go into business thinking wages are going to always remain the same. You have to have raises in your business plan.”
Illinois law already requires servers whose tips and base wage don’t equal what they’d earn on minimum wage to be paid the difference by employers. But those in favor of the city’s ordinance said many restaurants weren’t making up the difference.
Toia said instead of forcing every restaurant owner to incur higher wage costs, the state should be going after violators. He added that he’s pushing for a bill with more teeth that would revoke the licenses of businesses that don’t bring tipped workers up to the minimum wage.
Employers who violate the law are liable for any unpaid wages and damages equal to 5% of the underpayment per month. “Damages are payable to the employee and continue to accrue, without limitation, until the amount found owing is paid,” according to the Illinois Department of Labor.
Higher wages statewide
An effort pushed by the group One Fair Wage to eliminate the subminimum wage statewide failed in May 2024, but the organization has been trying again.
Last month, the group held a rally in Springfield with workers like Rhodes and members of the Rainbow Push Coalition to urge the passage of HB2982, which would require employers to pay tipped workers the state or local minimum wage, whichever is higher. The group also framed the bill as a racial justice issue and said if enacted, it would help nearly 65,000 Black tipped workers across Illinois.
Illinois’ minimum wage is $15 an hour, the highest in the Midwest, according to data from the U.S. Department of Labor. The state with the closest hourly rate is Missouri at $13.75. The federal minimum wage is $7.25 per hour.
Lorelei Walters, a bartender at Late Bar in Avondale since 2011, feels for those on both sides of the issue. While bars and restaurants don’t often make up the difference in tipped wages that fall below the minimum wage on slow days, she doesn’t think business owners should be forced to pay tipped workers a higher base wage.
“Being a previous small business owner, I know that it’s tough. It’s a lot,” Walters said, who had owned a hair salon.
As a worker who now relies on tips, she said things can get tough.
“In the winter, we struggle. It’s the type of employment where you have to save in the summer in order to be able to survive in the winter,” she said.
Bonomi, who said his servers average about $35 an hour, believes the timing of when the ordinance was introduced, along with its name, helped it pass.
“They gave it a clever name — the One Fair Wage Act — so who would be against people being paid fairly,” Bonomi said. “The mayor had just gotten elected, and it was his honeymoon period, and they got it pushed through. I was stunned to see some of the City Council members who voted for it. I don’t think they clearly understood it.”
Madia said, “I believe that there might have been a misunderstanding about tipped wage versus minimum wage. I also understand that the people who were driving this were talking about people who work in diners that don’t make a lot of tips.”
Ald. Ray Lopez (15th) voted in favor of the ordinance but now regrets it, saying he is now supporting efforts to repeal the law. But he also sees his vote as a compromise because he said the initial plan was to institute the ordinance sooner than July 2024.
“I was an absolute no, but the restaurant association and industry leaders said it was a compromise they could live with because it was a five year phase-in, as opposed to an immediate [one]. And they felt by the time it was fully implemented, there would be a new administration they could work with,” Lopez said. “People thought this was going to be beneficial. It’s actually become more harmful to our economic corridor and many of our businesses, and we need to repeal it.”
Lopez acknowledged getting the 26 City Council votes needed to repeal the ordinance will likely be an uphill climb.
“I’ve had one or two individuals mention [a repeal] to me anecdotally but nothing in terms of a serious effort, which is problematic if it’s going to be successful,” he said.