Chicago’s tipped workers will see another hourly wage increase up to $12.62 per hour as part of a law that will eventually eliminate the tip credit for restaurant workers. For many servers and bartenders, though, the wage hike comes with a load of concerns.
According to a new analysis from the Employment Policies Institute (EPI), Chicago’s retail food and tavern license issuances and renewals have dropped, restaurant and bar employment has fallen, and growth in the industry has dipped far below the statewide employment growth, following the city’s tip credit elimination law that began in July 2024.
The new analysis debunks claims from anti-tipping activists One Fair Wage, which used flawed and incomplete data in a recent report to claim the tip credit elimination law has been a “success.”
A quote from EPI’s research director, Rebekah Paxton on the issue is included below:
“The City of Chicago’s own data shows the opposite of what One Fair Wage and Mayor Johnson claim. Tip credit elimination has hardly been successful, instead hurting restaurant and tavern licenses, slashing those establishments’ jobs, and threatening workers’ way of life. The city should take a hard look at what is currently unfolding just one year into this experiment, and chart a new course before it is too late for many of the city’s restaurants and employees.”
Background:
- Data shows that issued retail food and tavern licenses dropped more than -8% after the tip credit elimination law went into effect (July 2024 to June 2025), compared to the previous year.
- The number of renewals also dropped during the same period.
- The available employment data provided by the Bureau of Labor Statistics shows that Chicago’s metropolitan area has lost over -1,200 restaurant and bar jobs since the tip credit elimination law went into effect on July 1, 2024 through the end of the year. Meanwhile over the same time frame, statewide industry employment grew.
- A survey found 87 percent of Illinois tipped workers support keeping a tip credit system, and do not want to see it changed to the One Fair Wage alternative.
- Washington DC, which One Fair Wage is using to prop up the “success” of their tip credit elimination platform, is currently moving forward on the Mayor’s calls to repeal the city’s tip credit elimination law (Initiative 82) and has paused an upcoming July 1 tipped wage hike.
- The city has seen a roughly -5% decrease in employment under the wage law.
- Workers have lost over -$11.8 million in earnings under Initiative 82.
- Local workers and restaurant owners have called for Chicago lawmakers to follow Washington, DC’s footsteps and move to repeal the law that eliminated the tip credit in the city.
To read more about the negative impacts the One Fair Wage law has had on the Windy City, and why One Fair Wage’s report is misleading, read our latest analysis here.