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Researcher: Storm looms over Chicago restaurants because of increased wages

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(The Center Square) – An employment research think tank predicts that a storm is looming over Chicago that will decimate the city’s restaurant industry.

On July 1, the wage for tipped workers in Chicago increased from $9.48 per hour to just over $11, the first of several planned raises. Each year, the city’s tipped minimum wage will grow by 8% until it matches the regular minimum wage in five years.

According to a report from the Employment Policies Institute, full-service restaurant employment in the Chicago metro area declined in April and May. Research Director Rebekah Paxton said it is a sign that restaurants are bracing for future wage increases.

“On top of price increases and more service charges in restaurants, you’re actually seeing employees lose their job or have limited hours, and we’re seeing restaurants close outright,” said Paxton.

Paxton pointed to Washington, D.C. where last year before the city began eliminating its tip credit and increasing the tipped minimum wage annually. D.C. restaurant employers indicated they would be forced to reduce hours or lay off staff, raise menu prices or shut down altogether.

The District of Columbia lost 1,000 restaurant jobs when the tipped wage was eliminated and Paxton warned of similar job losses in Illinois.

State Rep. Lisa Hernandez, D-Cicero, led an effort to eliminate the tipped wage statewide. She said she will tweak and reintroduce a bill that failed in the last session to raise the tipped minimum wage to $15 across the entire state.

“We fully intend to continue working on this bill over the coming months to ensure our workers in Illinois are taken care of,” said Hernandez in May.

The Illinois Restaurant Association, which lobbied against Hernandez’s legislation, predicts some diners will now tip less and lower the take-home pay for restaurant employees.

“If this legislation becomes law, here’s what we can expect: layoffs for servers, bartenders, bussers and runners, fewer hours for servers, and higher costs at the table for the consumer,” said IRA President Sam Toia.

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