Policy Snapshot Chicago

Chicago’s Restaurants Already Impacted by Tip Credit Elimination

Abstract

In the fall of 2023, Chicago’s City Council passed a full tip credit elimination bill that will go into effect on July 1, 2024. The law will raise the city’s minimum wage for tipped restaurant employees from $9.48 per hour to $11.02 per hour on that date, and continue to increase annually until restaurant employers will be required to pay the full minimum wage (currently $15.80 per hour) – a 66% increase in a few years. Even before this policy went into effect, restaurants started bracing for effect. A survey of Chicago restaurants found tip credit elimination would force them to raise menu prices potentially sacrificing customer foot traffic, introduce service fees, or lay off staff. Already, Chicagoans are reporting restaurants have begun adding automatic service charges ahead of the new increases beginning July 1. The latest federal employment data released June 25, 2024 finds:
  • Chicago full-service restaurant employment has lost 358 jobs in the last two months while Chicago’s total employment has been rising;
  • Since City Council passed a full tip credit elimination ordinance last fall, Chicago has experienced a net loss of hundreds of full-service restaurant jobs representing a -0.23% decline; and
  • Chicago’s full-service restaurant employment growth rates have stagnated.