The City Council voted 49-1 Wednesday, May 20, to freeze Chicago’s tipped minimum wage at $12.62 for two years, ending months of conflict between Mayor Brandon Johnson’s administration and aldermen over how to handle the sub-minimum wage.
Starting in year three, the tipped wage will rise with the Consumer Price Index. If minimum wage climbs 2.5 percent on July 1, 2026, as expected, the tipped wage will rise to $12.93, according to Sam Toia, president and CEO of the Illinois Restaurant Association.
“It’s froze at 24 percent,” Toia said. “So right now, minimum wage is $16.60 and tip credit is $12.62. But if minimum wage goes up with the cost of living, like 2.5 percent, which we think it will, then so will the tip credit.”
The vote marks a rare consensus moment in a council known for gridlock. Only two other compromise votes have occurred in recent years: an accessory dwelling unit ordinance and a TIF credit ordinance. Alderman Jason Ervin cast the only vote against the freeze. He did not explain his opposition during the council meeting.
Why restaurants needed relief
The compromise emerged after the Illinois Restaurant Association convinced aldermen that the mayor’s original push to eliminate the sub-minimum wage entirely was unrealistic. Restaurant owners face mounting pressure from higher rent, property taxes, and tariffs. Aggressive wage increases would force them to cut staff.
“I think a really good result for the Southwest Side,” said Alderman Marty Quinn (23rd), who helped lead negotiations, referring to efforts to recruit restaurants to the border ward where suburban competition offers lower labor costs. “There’s two sets of rules for restaurateurs, and the suburban rules favor the businesses more than in the city. So this is a good faith effort to try to level the playing field.”
Quinn warned that back-of-house workers would have suffered most from the mayor’s original proposal.
“The people that were hurting the most from the mayor’s policy were the back of the house staff — your dishwashers, your line cooks,” Quinn said. “Those are the folks that were losing shifts.”
Toia said the two-year pause gives the industry breathing room. Product costs have climbed 35 percent since the pandemic ended, labor costs are up 35 percent, and fixed costs including insurance and property taxes have risen nearly 19 percent.
“The restaurant industry was an industry of nickels and dimes before the pandemic,” Toia said. “Since the end of the pandemic, it’s turned into an industry of pennies and nickels, and we don’t even make pennies anymore.”
Nearly 500 restaurants closed in the first half of 2025 alone, according to Datassential, a food and beverage industry data platform. Toia cited empty storefronts along 79th Street, 53rd Street, and Pulaski Avenue as evidence of the closures.
“Every time you raise your prices, you lose some customers,” Toia said.
Toia said the Illinois Restaurant Association would have preferred a permanent freeze.
“We would’ve liked to see a permanent freeze at 24 percent. Originally, three years ago, it was at 40 percent. We didn’t ask to go backwards. We thought we were honest brokers, and we kept it at 24 percent,” he said.
He called the two-year deal a win.
“I’d rather be at the table than on the menu,” Toia said.
Support from other aldermen
Alderman Gil Villegas (36th) noted that the average tipped worker’s salary is approximately $28.40 per hour, about $58,000 per year, compared to the minimum wage of $16.60 per hour, or $34,000 per year. He said Illinois has always paid minimum wage.
“There is no sub-minimum wage. This has always been a solution in search of a problem,” Villegas said. “It’s OK to say ‘Hey, we tried this it didn’t work, let’s pause for a second and let’s fix this and allow the economics to play out.'”
Alderman Walter Burnett Jr. (27th) thanked colleagues for letting him lead negotiations, noting the complexity of achieving compromise. Like Villegas, Burnett said understanding Chicago’s restaurants’ issues and challenges was critical.
“Between the national issues that aren’t our fault, the tariffs, increased gas prices, the changing technology, we need the opportunity to study how all of these cost impacts are making our restaurant industry struggle,” he said.
Burnett also noted that changing credit card policies pose challenges for restaurants. An Illinois law being considered would prohibit banks from charging tax and tip fees on credit cards.
The opposition’s case
Opponents of the freeze argued for phasing out the sub-minimum wage entirely, saying all workers deserve the full minimum wage. They cited campaigns by One Fair Wage, a California-based activist group, as evidence that change was necessary.
Alderman Jessie Fuentes (26th), who introduced the One Fair Wage ordinance, said she was “heartbroken” with the vote but acknowledged the importance of council compromise.
“We fought for ‘One Fair Wage’ so that no matter the color of one’s skin or the ZIP code they reside in, that they can take a wage home that will pay their bills and support their families,” Fuentes said. “That is why we passed ‘One Fair Wage’ and I still to this day believe that that’s important.”
The aldermen rejected that argument. State law already requires restaurants to make up the difference if tipped employees don’t earn minimum wage in a given week.
“The average salary for tip workers is like $28 an hour,” Quinn said. “I didn’t necessarily buy the opposition’s argument in its entirety.”
Toia said the push came from outside Chicago. “This was driven by activists out of California, not here from Chicago. Not from Garfield Ridge, not from Portage Park, but from California.”
California is one of seven states that adopted One Fair Wage policies. Others include Alaska, Minnesota, Montana, Nevada, Oregon, and Washington.
A server speaks
Afra Duran, head server at the Red Barrel, a restaurant on the city’s southwest side, said she likes where she works and the restaurant’s owner(s) are good to servers.
Still, a higher minimum wage could be helpful, she said because servers share tips with their bussers reducing net take-home pay.
Duran also recognizes that paying $16 per hour would cause servers to lose their jobs but customers do not always tip a percentage commensurate with their bill.
“The people do not always have awareness of tipping; maybe the pay is too low,” she said. “If breakfast or dinner is not too much money, there can be no tips.”
One option could be an automatic tip added to each bill, Duran said.
What servers actually earn
The Illinois Restaurant Association surveyed tip employees and found strong support for the current system.
“Eighty percent of tip employees believe the current system works and does not need to be changed, and 86% of tip restaurant servers who believe they will earn less if the tip credit is eliminated,” Toia said.
The average server in Illinois earns close to $29 an hour when combining the tip credit wage and tips, Toia said. This applies across all restaurant types, from independent neighborhood spots to high-end steakhouses.
“No one in the state of Illinois or the city of Chicago makes less than minimum wage. That is by law,” Toia said.
Employers must make up the difference if a tipped employee’s earnings fall short of the full minimum wage in any given week.
“We do know from Business Affairs and Consumer Protection, 99.6 percent of the restaurants are doing it right,” Toia said. “Like I said, 0.4 percent, there were complaints about. But 99.6 percent of the restaurants out here make sure that everyone is making the $16.60 or like I said, the average server is making close to $29 an hour.”
Toia said servers choose the industry because of tips, not base wages.
“People that go into the service industry, they don’t say I’m going to work to make minimum wage,” he said. “They go because they want to make tips. They want to serve drinks. They want to serve desserts. And then, the higher the check is, the more tip they get.”