As July brings another round of phased-in minimum wage increases in various states around the country, the debate over the tip credit also remains in play in some markets.
In Chicago on Monday, state lawmakers and labor activists plan to celebrate the phase-out of the tipped wage there with a release of a report on its impact, with hope the legislation will be adopted statewide.
According to the activist organization One Fair Wage, tipped workers have earned $137.2 million in new wages since the phase-out of the tip credit began a year ago. Since then, restaurant jobs have increased, the group said, 856 new restaurants have opened in Chicago and business license cancellations have been cut in half.
On July 1, the hourly wage for tipped workers will increase from $11.02 to $12.62, which the group says will be the single largest annual pay increase for tipped workers in Chicago history.
In Washington, D.C., meanwhile, voters had passed a ballot initiative to phase out the tip credit, and the city is two years into a three-year phase-out. But city lawmakers earlier this month voted to pause the phase-out while it considers a repeal of the law.
Mayor Muriel Bowser last month called for a return of the tip credit in her proposed budget next year, arguing that restaurants in the city are already facing a “perfect storm” of increased operating and supply costs, higher rents and unique labor challenges.
As a result of the pause, D.C.’s tipped wage will remain at $10 per hour, and will not be increased to $12 per hour in July, as previously scheduled.
In Michigan, where lawmakers earlier this year agreed to a compromise that kept the tip credit alive there, One Fair Wage is reportedly seeking a ballot initiative in a new attempt to repeal the tip credit again and increase the minimum wage, which is already set to increase to $15 per hour by 2027, with annual inflation adjustments after that. In February, Michigan’s minimum wage increased to $12.48 per hour.
In Los Angeles, opponents of a plan to increase the minimum wage for hotel and restaurant workers near Los Angeles International Airport, or LAX, to at least $30 per hour by 2028 are also gathering signatures in an attempt to bring the issue to voters via ballot initiative.
The minimum wage across the Golden State increases to $16.50 in July, though many cities far exceed that. In Los Angeles, for example, the minimum wage will increase to $17.87 from $17.28 per hour (or $17.81 in unincorporated areas) on July 1. In San Francisco, the hourly wage rate will increase from $18.67 to $19.18.
In California, where there is no tip credit, the fast-food wage remains at $20 per hour for hourly workers. The state’s Fast Food Council’s planning subcommittee earlier this year voted to put a potential cost-of-living wage increase on the agenda for discussion at the next meeting, but the date has not yet been determined.
Last week, a spokesperson said the council is awaiting the governor’s appointment of a new chair to preside over proceedings.
In Oregon on July 1, minimum wage rates will increase 35-cents based on the Consumer Price Index. In Portland, for example, the minimum wage will increase from $15.95 to $16.30.
In Alaska, which is also on a path to a $15 per hour minimum wage by 2027, the wage increases from $11.91 per hour to $13 per hour on July 1.
Meanwhile, advocates of a higher minimum wage appear to have a new ally in Republican Senator Josh Hawley, who earlier this month introduced a bill that would increase the federal minimum wage to $15 per hour from the current $7.25. The federal minimum wage hasn’t been increased since 2009.
It's not clear, however, whether Hawley’s effort will win the support of President Donald Trump, who, when asked about the proposed wage increase, reportedly called it “interesting,” adding, “You have to think about that one.”
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