Five local and regional Illinois chambers of commerce have joined the Protect Illinois Hospitality coalition of tipped workers, service operators, and local businesses and organizations who want to preserve current tipping in Illinois.
New members of the coalition announced by the Illinois Chamber are: Quad Cities Chamber of Commerce, Chicago Southland Black Chamber of Commerce, McLean County Chamber of Commerce, Bolingbrook Chamber of Commerce, and the Woodstock Chamber of Commerce.
The now 26-member Protect Illinois Hospitality coalition was organized to oppose Illinois House Bill 5345. Under it an employer would no longer be entitled to an allowance for gratuities. They would instead have to pay each employee no less than the applicable minimum wage rate. That includes any minimum wage rate higher than the state minimum wage as required by local ordinance in home rule municipalities.
Coalition members say it would alter the way restaurants, bars, breweries, hotels and other businesses that use the tip credit pay their employees. That would lead to less take-home pay for workers and increased costs for restaurants and consumers.
Currently every tipped employee in Illinois already makes at least the minimum wage. Studies have shown that tipped workers have higher earning potential in the current system than they would if the tip credit were eliminated, the coalition said.
Currently businesses pay a portion of the tipped employee’s hourly minimum wage, with the rest being made up by tips to equal at least the full state-mandated minimum wage. The base wage for tipped employees in Illinois is $8.40 per hour. Minimum wage is $14 per hour. If employees do not make at least $14 per hour with combined base wage and tips, businesses are required by law to pay the difference. Thus ensuring every tipped worker makes at least minimum wage.
Beware trickle effect
“Eliminating the tip credit in Illinois would not only harm our hospitality industry and hard-working tipped employees but also inflict a negative trickle effect on businesses across various sectors,” Quad Cities Chamber President and CEO Peter Tokar III said in the release.
“This legislation threatens to increase operational costs for businesses, leading to potential job losses and decreased consumer spending. It is imperative that policymakers consider the broader economic impact and work collaboratively with stakeholders to find effective solutions that support both businesses and consumers alike,” he added.
“The hospitality industry in Illinois is a strong economic driver to the state’s economy. We have some of the best breweries, restaurants, and hotels in the world and we should be doing what we can to help these businesses continue to prosper and grow,” said Lou Sandoval, Illinois Chamber of Commerce president and CEO.
“However, policy changes are being discussed that would eliminate the tip credit, effectively hurting the heart and soul of what makes those businesses special – the people,” he added. “That is not the path that we should take as it will impact our small independent operators in communities all over the state the most. We hope Illinois legislators will reject these plans and vote no on any measure that will eliminate the tip credit on hospitality workers.”
Workers oppose change
According to National Restaurant Association research, the median tipped restaurant worker in Illinois currently earns $28.48 per hour. In a recent survey of Illinois servers, bartenders, and other tipped staff, 87% agreed that the current tipping system works well and should not be changed. A majority believe eliminating the tip credit will lead to customers tipping less and overall lower take-home pay.
Also, in addition to lowering take-home pay, eliminating the tip credit puts thousands of workers at risk of losing their jobs, the coalition said. In May 2023, Washington, D.C. became the first jurisdiction in the nation in more than 20 years to begin eliminating the tip credit. Since then, more than 3,700 full-service restaurant jobs have been lost.
Restaurants, bars, breweries, hotels, and other businesses who use the tip credit would also be forced to pass the increased cost on to consumers to try to make ends meet. Many would still need to cut shifts or tipped staff positions or permanently close, the release said.
Illinois diners have indicated they would be likely to change their dining habits in restaurants that increase menu prices or implement automatic service charges to offset increased labor costs, further adding to the burden on restaurants already operating on thin profit margins, according to the coalition.
