After the city council passed an ordinance to eliminate Chicago’s tip credit last year, the city experienced a one-two punch of wage hikes this summer. As a result, the number of jobs in the Chicago area’s leisure and hospitality sector plummeted – slashing 6,000 jobs as of September 2024.
In fact, the Chicago metropolitan area’s leisure and hospitality industry employment was the lowest it has been since May 2023.
Prior to the new anti-tip credit legislation, Chicago allowed hospitality employers of tipped workers (including servers and bartenders) to take a tip credit for as much as 40% of the regular minimum wage rate, which was $15 from July 1, 2023 to June 30, 2024. The new legislation shrinks the tip credit every year until July 2028 – it is fully eliminated for tipped workers.
This past July, instead of a regular 2.5% increase in both the regular minimum wage and the tipped minimum wage – hospitality employers became subject to a $16.20 hourly regular minimum wage and a 16% tipped wage increase up to $11.02 per hour.
Both wage hikes hit the leisure and hospitality industry uniquely hard – as the industry employs roughly 70% of all minimum wage earners.
This news analyzing just two months of the effects of the new wage hikes comes as tipped workers across the country have rejected attempts to eliminate their tip credits – and a bipartisan group of lawmakers in Illinois killed a bill to bring Chicago’s anti-tip credit policy statewide following restaurant and employee concerns.