Evidently, most of our City Council members don’t understand that tipped employees in Chicago are already guaranteed a minimum wage of $15.80, a wage that has been among the highest in the country since July 2015. The city’s Office of Labor Standards states that, “Tipped workers (workers who receive tips as part of their wage, like restaurant servers) have a minimum wage of $9.00 for employers with four to 20 workers, and $9.48 for employers with 21 or more workers. If a tipped worker’s wages plus tips do not equal at least the full minimum wage, the employer must make up the difference.”

That’s right: Any employer who uses the tip credit must guarantee that all employees who receive tips make at least the mandated minimum wage. So whether you’re a server at Gibsons in the Gold Coast or at a diner on the South Side, Chicago’s minimum wage law guarantees you a fair minimum wage this year of $15.80. If passed, all the proposed ordinance will do is transfer about 50% of the minimum wage that tipped employees are willingly paid by diners’ tips onto the backs of post-COVID business owners, many of whom are struggling for their very survival.

I did some calculations using the actual profit and loss statements from one of my own full-service restaurants. They showed that eliminating the tip credit would increase my labor costs by nearly 25%, more than enough to wipe out any annual profit. And if published industry standards are correct, the same would hold true for lower-volume full-service restaurants as well. 

So, if tipped employees are already guaranteed to make the “fair wage” that all other workers in Chicago are guaranteed, why is this ordinance being introduced at all? I’m no political guru, but it certainly doesn’t take one to conclude that pro-labor Mayor Brandon Johnson might be the driving force. After all, he made elimination of the tip credit a campaign pledge. And based on the name of the proposed ordinance, one might also easily conclude that the One Fair Wage organization is also involved.

One Fair Wage is a nonprofit that, according to The Wall Street Journal, “is pushing bills and ballot measures in 25 states to raise wages and eliminate what it considers to be a ‘sub-minimum wage’ for tipped workers.” According to FSR, a restaurant trade magazine, the group has launched a $25 million campaign to achieve this goal by 2026. Passage of the proposed Chicago ordinance would be a massive PR win for One Fair Wage. Unfortunately for us all, it would also cause massive collateral damage not only to Chicago businesses that rely on the tip credit, but also to the guests who patronize them.

Full-service restaurant owners like me will be left with only three options, none of which are good.

Option one would be, of course, to raise prices by about 5%, but owners are already struggling with that by tacking on service charges and credit card fees at the bottom of checks to hide the true cost of meals. And there’s really not much more that diners are willing to swallow.

Option two is to invest in technology to eliminate tipped jobs. In order to survive, full-service dining could easily morph into a scenario where after being seated, perhaps by a robot, guests order through their phones, with food and drinks being delivered by runners, or another bot.

Option three is the doomsday scenario: close. In reality, none of these choices is good for Chicago’s businesses, their employees or their patrons.

Our city has already solved the “one fair wage” problem. Passing an ordinance with the same name is just a PR stunt that will only hurt our city and everyone in it.

Dan Rosenthal has owned and operated restaurants in Chicago for more than 35 years, including several Sopraffinas, Trattoria No. 10 and the original Harry Caray’s.