Here's what to know about Chicago’s minimum wage increase and how it affects tipped workers

We break down complex business news to help you understand how money moves in Chicago and how it affects you.

Tipped workers are now making more in Chicago.

The city’s tipped minimum wage increase began July 1 after the City Council passed an ordinance in October to increase the tipped minimum wage by 8% each year for five years until it reaches parity with the Chicago’s standard minimum wage.

Here’s how the increase works, and how different sides of the industry are reacting to the change:

How much is Chicago’s new tipped minimum wage?

On July 1, the One Fair Wage spearheaded the campaign in Chicago to increase the tipped minimum wage and eliminate the tip credit system. It also led a similar law in Washington, D.C., that went into effect last spring.

In May 2023, Washington’s tipped minimum wage increased from $5.35 per hour to $6 then to $8 by July 1, 2023. It rose again to $10 per hour on July 1.

After the act went into effect, the number of employees at full-service restaurants dropped by 1,900 in about a year — from 30,500 in May 2023 to 28,600 in April 2024, according to data from the Bureau of Labor Statistics.

It’s unclear why the restaurant jobs were shed, but the National Restaurant Association attributes the decline to the new policy.

La Voz Sidebar

Lee este artículo en español en La Voz Chicago, la sección bilingüe del Sun-Times.

Meanwhile, the number of employees at limited-service restaurants in Washington, D.C., rose from 13,900 in May 2023 to 14,200 in May 2024, according to the BLS.

The bureau’s data shows waiters and waitresses in Washington, D.C., earned an average hourly wage of $24.98 in May 2023, up from $24.42 in May 2022. It’s also higher when compared to before the pandemic when the average wage was $23.83 in May 2019.

But the Economic Policy Institute said servers at high-end restaurants tend to do “exceptionally well,” which can skew the average wage. The group said the median wage, which is significantly lower, “is indicative of significant wage inequality among district waitstaff.”

The BLS reported Washington’s median hourly wage for servers in May 2023 was $17.98, up from $17.48 in 2022. In May 2019, the median hourly wage was $17.37.