Arlington, Va. – On Wednesday, the Illinois House Labor and Commerce Committee will hear public testimony on House Bill 5345, which would eliminate the state’s tip credit and nearly double the current required hourly wage for tipped employees.

Rebekah Paxton, research director for the Employment Policies Institute (EPI), submitted written testimony ahead of the hearing, highlighting the adverse impacts this policy would have on Illinois’ servers, bartenders, and restaurants. Her testimony (available here) includes:

• Data on the statewide consequences of tip credit elimination, which would kill an estimated 7,730 jobs and lead to $20.7 million of lost earnings for tipped employees. 
• The disastrous fallout from a similar proposal in Washington, D.C., where full-service restaurant employment has dropped 4.4 percent, and the rate of restaurant closures is the highest since the pandemic;
• The early consequences are already evident in Chicago, where a tip credit elimination law will take effect in July;
• Insights from economic studies on the harmful track record of these policies across the country.

Ahead of the hearing, Paxton issued the following statement:

“Decades of evidence show that ending the tip credit cuts earnings, kills jobs, and shutters restaurants. Other markets across the country, including the nation’s capital, offer cautionary tales about the devastating effects of tip credit elimination. Members of the committee should ignore the activists trying to export the D.C. disaster to Illinois before they wreak more havoc in the state.”