(The Center Square) – An employment expert says eliminating the tipped minimum wage will have the opposite effect of what it is designed to do.
The city of Chicago recently voted to raise the subminimum wage for tipped workers by 66% over the next five years. The change means raising the minimum wage for tipped workers from $9 to $15.80 per hour, though such employees could still get tips.
Currently, servers and other hospitality workers are paid a lower minimum wage, and restaurants are supposed to make up the difference to the minimum wage if the server does not make enough in tips.
Mayor Brandon Johnson said raising wages in the industry will help staffing shortages.
“By increasing wages, we can address the restaurant industry’s staffing crisis, increase opportunities for youth employment, and create a safer and more welcoming working environment,” Johnson said.
Michael Saltsman, executive director of the Employment Policies Institute, said the flawed policy will not address staffing shortages.
“The mayor has no idea what he’s talking about,” Saltsman said. “The only thing that is going to happen here is it’s going to drive servers outside the city because they’re going to find themselves earning less than they did before.”
Saltsman said the same policy has been disastrous across the country, most recently in the District of Columbia, causing a rise in service charges, layoffs and restaurant closures.
A survey by the Illinois Restaurant Association, which reluctantly backed the proposal, found that 80% of restaurant operators said they will be forced to raise menu prices and two-thirds say they will be forced to cut staff.
EPI reports that tipped restaurant employees have led the charge to protect tip credits across the country, including in New York, New Mexico, Maryland and Virginia.
The raises for Chicago servers will begin July 1, 2024.