The Illinois Restaurant Association is trying a different approach in a long-shot bid to discourage the Chicago City Council from eliminating the subminimum wage for tipped workers.
Armed with a survey showing a higher wage could be a death knell for smaller restaurants, association President Sam Toia is proposing a less costly alternative. He’s urging dramatically higher fines for restaurants that thumb their noses at the mandate that restaurant owners make up the difference whenever their tipped workers — now paid $9.48 an hour — don’t make enough in tips to reach the $15.80-an-hour mandatory minimum wage that applies to all other Chicago workers.
“Why don’t we go after the bad actors and actresses? We, at the Illinois Restaurant Association, do not back bad actors and actresses. Let’s make it really stiff fines. Let’s get out there and go on a campaign [urging people to] call 311. Call Business Affairs and Consumer Protection, and let’s go after these bad actors that are not making up the difference between $9.48 and $15.80,” Toia told the Sun-Times Wednesday.
“Activists say there’s people being exploited out there. If they are, let’s go after ’em. Let’s quadruple the fines. I’m willing to do that,” he added. “And we have data out there that shows that the [average] restaurant worker in the city of Chicago is making $28.48-an-hour with their tips and their tipped credit wage from $9.48.”
The survey of 315 Chicago restaurant owners was conducted in August by Lloyd Corder, CEO of CorCom Inc., a Pittsburgh-based marketing research and consulting firm.
It showed phasing out the subminimum wage over two years — proposed by an ordinance championed by Mayor Brandon Johnson’s Council allies — would have dire consequences for customers and employees:
• 80% of those surveyed would raise menu prices to offset the added cost, and 46% would add automatic services charges to checks.
• 66% would reduce staff or consolidate positions, and 58% said they would reduce employee hours. Also, 76% would decrease the number of tipped workers.
• 36% would use self-service technology to reduce labor costs, with 26% “closing one or more locations” in Chicago.
• 25% would switch to a business model that relies more on quick service or counter service, while 19% said they would adopt a “no tipping required” policy.
• Average restaurant profit margins would be reduced to 1.5% from the current 3% to 5% margins.
The bottom line, Toia said, is that two years isn’t nearly long enough for Chicago restaurants to absorb a 66% increase in labor costs.
“You will kill Ma and Pa restaurants throughout our 77 communities,” Toia said. “We’ve got to phase this in over five years. … Let’s [even] drag it out or six or seven years to make it workable for these independent restaurants in our neighborhoods.”
Ald. Jessie Fuentes (26th) is negotiating with the restaurant industry on behalf of Mayor Brandon Johnson, who campaigned on a promise to eliminate the subminimum wage. That lower wage has disproportionately affected African Americans in general and Black women in particular.
On the day Fuentes introduced the two-year phaseout, she said she was open to four years, but no more.
On Wednesday, the same day the two-year phase-in was moved to the City Council’s Workforce Development Committee, Fuentes said three years was as far as she was willing to go.
She said she doesn’t buy Toia’s “scare tactic” claim that giving restaurants less than five years to adjust would force family-owned neighborhood restaurants out of business.
“Speaking to electeds in other cities and restaurants who have been able scale up to the minimum wage in cities in which the gap was much larger allows us to believe that we can do this scaleup in two [years]. Negotiating toward three would be us meeting in the middle,” she said.
Fuentes acknowledged City Hall has not held accountable restaurants that fail to make up the difference between tipped wages and the minimum wage.
But she said: “This is more than just holding bad actors accountable. We’re talking about ensuring that families can financially provide for their children. Rent is going up. The cost of living is going up. And the subminimum wage is just not enough.”
