Illinois tipping bill could cut earnings for restaurants, servers
State politicians might eliminate the tipped minimum wage, putting tipped workers on the $15 per hour wage. But with higher wages come higher costs for businesses, which could raise prices or cut jobs.
State leaders might pass a new law that could hurt tipped workers across Illinois instead of helping them.
House Bill 2982 is before the Illinois House and would end the “tip credit” by July 2027. If passed, all employers would pay tipped workers the full $15 minimum wage. While this might sound good, it creates problems for workers in restaurants, hair salons, hotels, car washes and many other businesses.
A survey by the Illinois Restaurant Association found 92% of Chicago restaurants would raise menu prices in reaction to the Chicago City Council phasing out the tipped minimum wage. When government forces employers to pay higher wages, those costs are passed on the customers, jobs are cut, work hours reduced or the business closes.
The biggest worry is customers might stop tipping altogether. If your server, hairstylist, or hotel worker gets full minimum wage and there’s already a “service charge” on your bill, people will have less money and feel there is less need to tip.
Many tipped workers could end up making less than before. For example, the typical tipped restaurant worker in Illinois makes $28 per hour according to the Illinois Restaurant Association, whose president Sam Toia testified against the bill.
The law would punish employers with $1,500 daily fines for violations and prevents them from deducting credit card fees from tips. These extra costs would either mean higher prices for customers or fewer jobs for workers.
Illinois already has trouble keeping businesses from leaving the state because of high taxes and too many rules. This new law will only make that problem worse.
While restaurant servers may be the most visible example, this affects thousands of workers across many industries. Whether it be lawn care or serving drinks, workers who give great service should have the chance to earn great tips without politicians interfering with the decision.