With a new tipped wage hike in place as of Monday, July 1, the latest data on job trends paints a harrowing picture for the future of Chicago’s restaurant industry. Lawmakers should watch these trends closely as the city begins eliminating its tip credit over the next few years.
Looking at new data released for Chicago’s metropolitan area*, of which the majority of employment lies within Chicago’s city limits, the full-service restaurant industry saw back-to-back months with job losses while fast food (“limited-service”) restaurants and the city’s total employment both added jobs. This job loss trend specific to the full-service restaurant industry indicates that local operators may have been bracing for the impacts of the first tipped wage hike on July 1.
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Full-service restaurant employment in the Chicago metro area declined in both April and May, according to the latest Bureau of Labor Statistics job report.
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At the same time, Chicago’s total employment and limited-service restaurant employment increased.
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This may indicate full-service restaurants affected by Monday’s wage hike are already making changes and bracing for future wage increases. Recent coverage has detailed restaurants’ and employees’ concerns regarding the upcoming wage hike for tipped employees from $9.48 to $11.02 per hour, on its way to $15.80 per hour in a few years. Full-service restaurants with tipped employees are most likely to be affected by the new law, compared with fast food restaurants or other industries.
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This phenomenon occurred in Washington, D.C. last year before the city began eliminating its tip credit and increasing the tipped minimum wage annually. D.C. restaurant employers indicated they would be forced to reduce hours or lay off staff, raise menu prices, or shut down altogether as a result of a tipped wage law similar to Chicago’s.
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Chicago Metro Area: Full-Service Restaurants |
Chicago Metro Area: Limited-Service Restaurants |
Chicago Metro Area: Total Employment |
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Jan 2024 |
123,145 |
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112,446 |
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3,806,900 |
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Feb 2024 |
123,828 |
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113,221 |
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3,814,700 |
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Mar 2024 |
123,928 |
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113,628 |
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3,819,000 |
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Apr 2024 |
123,773 |
-155 |
114,629 |
+1,001 |
3,821,100 |
+2,100 |
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May 2024 |
123,570 |
-203 |
114,962 |
+334 |
3,827,500 |
+6,400 |
Time will only tell what impact this tipped wage hike will have on restaurant employment and survival. However, an early trend of industry-specific job losses is a cause for concern for the future.
Data Notes:
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U.S. Bureau of Labor Statistics and Federal Reserve Bank of St. Louis, All Employees: Leisure and Hospitality: Full-Service Restaurants in Chicago-Naperville-Arlington Heights, IL (MD) [SMU17169747072251101SA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SMU17169747072251101SA, June 28, 2024.
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U.S. Bureau of Labor Statistics and Federal Reserve Bank of St. Louis, All Employees: Leisure and Hospitality: Full-Service Restaurants in Chicago-Naperville-Arlington Heights, IL (MD) [SMU17169747072251101SA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SMU17169747072251101SA, June 28, 2024.
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U.S. Bureau of Labor Statistics and Federal Reserve Bank of St. Louis, All Employees: Total Nonfarm in Chicago-Naperville-Arlington Heights, IL (MD) [SMS17169740000000001], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SMS17169740000000001, June 28, 2024.
*This dataset represents full-service restaurant, limited-service restaurant, and total employment for the Chicago-Naperville-Arlington Heights metro division, which includes several counties outside of Chicago. Chicago represents the majority share of employment in this region.