Mayor, City Council hand another victory to organized labor
On Wednesday, September 20, the Chicago City Council’s Committee on Workforce Development voted 9-3 to advance a proposal to eliminate subminimum wages for tipped workers. The culmination of a years-long campaign waged by Democratic Socialist and progressive aldermen to raise wages from the lower rungs of the labor market, supporters of the proposal have routinely portrayed tipped workers as experiencing tyranny at the hands of business owners, laboring in intolerable work conditions, and poverty stricken.
Convenient fictions of the Left, while much of the sloganeering surrounding the crusade to erase subminimum wages insist it will uplift the deprived, eliminating the tipped wage will undermine worker earnings and deliver a crushing blow to Chicago’s beleaguered restaurant industry.
Under the current system, the hourly wage for a tipped worker is $9.48. Should the circumstance arise in which a tipped worker fails to earn the prevailing $15.80 minimum wage, the business owner is legally obligated to renumerate the employee the outstanding amount. With the expected approval of the amendment of Section 6-105030 of Municipal Code Chapter 6-105, tipped workers will see their hourly wages rise incrementally over the next five years until it reaches the nominal $15.80.
While the amendment to Section 6-105030 is still yet to be approved by the city’s legislative chamber, the amended ordinance’s co-authors, Carlos Ramirez-Rosa (35) and Jessie Fuentes (26), both spoke as if passage of the revised law had no drawbacks for workers reliant on gratuities.
Commenting with glee on the revised ordinance making it out of committee, Alderman Ramirez-Rosa mentioned ending subminimum wages was the “first redistributive policy” the City Council approved and said:
“This mayor is prioritizing Black women and Latinas that are the head of households, who oftentimes struggle to make ends meet, who often struggle in the restaurant industry to make enough money and tips to even reach the minimum wage.”
A man filled with cheap promises, though Mr. Ramirez-Rosa depicted subminimum wage earners as submerged in poverty, he carefully concealed the fact the median full-service restaurant tipped worker earns $28.48 hourly in the State of Illinois. Far from the wages of a pauper, shrugging at the consequences of the elimination of subminimum wages on Chicago’s restaurant industry, Ramirez-Rosa continued to feed the media line after line of worker oppression.
“We know what the data says. We have decades of research. Los Angeles, Minneapolis, cities across this nation with economies very similar to ours have already instituted One Fair Wage with tips on top. Restaurants are opening up, restaurants are growing, restaurants are employing more workers and workers are making the same — or more — in tips,” Ramirez Rosa said on the Council floor.
A thoroughly dishonest mischaracterization of the state of the restaurant industry in Chicago, it has become commonplace on the Left in recent years to declare workers in Chicago are terribly underpaid. Unsurprisingly, Mayor Brandon Johnson, Floor Leader Ramirez-Rosa, and progressive leaders have all argued the lone way to rectify the unfairness of low pay is to intervene and fix wages by statute.
Deceptive help for labor, by voting to eliminate subminimum wages, Mayor Johnson and his DSA and progressive allies have ignored the potential effects on the restaurant industry and tipped staff. Obstinate and convinced of the righteousness of their cause, progressives arguing in favor of abolishing subminimum wages have disregarded the new law will likely force restaurants to lay off staff and conceivably require restaurants to impose service charges on customers. Aside from increased costs on consumers, wiping away subminimum wages is also expected to cut into pay for tipped workers — mainly by a reduction in gratuity — cut employee hours, and obligate restaurants to raise costs on menus.
A bad policy at the wrong time for Chicago, what progressive lawmakers fail to grasp is gratuities give vigor to labor and encourages high productivity. Demanding work, food and beverage servers dependent on gratuities receive direct feedback from customers who experience quality service. The elimination of subminimum wages is severing the link between labor and customer, and likely to lower worker productivity in a field in which customer satisfaction is paramount. Removing subminimum wages could lead to a degraded experience and customers declining to frequent the establishment.
Additionally, by shifting part of the cost to the customer in exchange for high quality service, restaurants are impelled to raise prices generally. An industry which operates primarily on very low margins, cost increases are often counterbalanced by layoffs or reductions in hours. All of this harms restaurants.
Furthermore, there are some salient tax implications here, one of which should not be ignored. For better or for worse, cash tips earned are a vastly underreported by subminimum wage earners. A great benefit to subminimum workers— good for them — this reprieve for those who fall under the subminimum umbrella is removed entirely and all additional income in the form of wages would be subject to tax with the amendment to Section 6-105030.
Tipped wage earners will earn less under the amended law
There are extraordinary benefits to subminimum wages. One of the great advantages of the pay structure is it enables workers without a college degree, vocational certificate, or specific skill to earn a decent wage. Some subminimum workers can earn a handsome living.
In the popular imagination, progressives and Democratic Socialists are presumed to represent lower- and middle-class workers. With the repercussions of ending tipped wages likely severe, it is therefore fair to inquire what market failure inspired Mayor Johnson to intervene and fiddle with subminimum wages. The answer is fairly obvious: There is no market failure.
With no market failure, the explanation to why the mayor and his progressive allies are tampering with wages is found in politics: Johnson and the DSAs are setting the stage for the unionization of subminimum-wage restaurant workers. Evidence of this is surfaces in Mayor Johnson’s association for One Fair Wage. The leading light to the end tipped wages, One Fair Wage is a far-Left group determined to force all service-sector laborers to enlist in dues-collecting labor organizations.
A fundamental feature of radical movements — progressivism — is they harm most those they claim to be helping. The goal of the movement to end subminimum wages is not about helping laborers achieve fair pay. In sharp contrast, the purpose is to set Chicago in the direction of complete control by unions.
