Chicago City Wire

It has been nearly two years since Mayor Brandon Johnson announced the One Fair Wage ordinance, a policy designed to phase out the subminimum wage for tipped workers over five years. As the second of five scheduled wage increases approaches, it is time to assess the impact on Chicago's restaurant industry.

The debate over a separate lower minimum wage for tipped workers has been ongoing. Supporters, mainly from the progressive Left, argue that the subminimum wage is exploitative and undermines employee bargaining power. Opponents claim that eliminating it forces restaurants to increase menu prices, add service charges, or close due to higher costs.

The ordinance was supported by One Fair Wage, a progressive group advocating for tip credit elimination schemes. They found an ally in Mayor Johnson, who believes in cooperation between labor and the city and sees discarding dual minimum wages as a step toward addressing racial and economic inequities.

Upon passing the ordinance, Mayor Johnson expressed his enthusiasm: “The One Fair Wage ordinance embodies Chicago’s values of uplifting working people and addressing systemic inequities in the restaurant and hospitality industry... This legislation is the culmination of years of advocacy...”

However, before the ordinance took effect, full-service restaurant employment had already dropped by 358 jobs in two months prior to July 1, 2024. The Department of Labor reported that since its implementation a year ago, 5,200 full-service restaurant jobs have been lost, service fees increased at many establishments, and 100 restaurants have closed.

These figures pose challenges for City Hall. While repealing One Fair Wage could stabilize job losses and closures, it remains politically unfavorable for Mayor Johnson. Similar issues were seen in Washington D.C., where a similar law led to significant job losses before being challenged by Mayor Muriel Bowser.

Mayor Johnson had promised higher earnings without affecting gratuities but faced criticism as employees experienced fewer tips alongside job losses and closures. Options like granting tax credits or using Tax Increment Finance surplus are available to mitigate impacts on restaurants.

The future of Chicago's restaurant industry under One Fair Wage looks bleak if no action is taken. Despite this damage, repeal seems unlikely given Mayor Johnson's commitment to his activist base over changing course.