Getting rid of tipped wages in Illinois would be the final blow to many restaurants
A server tends to a table of customers at Athena Restaurant in February 2022.
Tyler LaRiviere/Sun-Times
I am privileged to serve the village of Niles in two capacities. The first is at my family restaurant, which has served local customers for nearly five decades. The second is as mayor, serving my constituents since 2021. I’ve always said that running a great municipality is like running a great business, and being able to wear both hats often allows me to provide a different perspective to my fellow civic leaders.
Take, for example, a proposed bill in Springfield that would eliminate the tip credit and fundamentally change the way Illinois restaurant workers are paid. At its core, this proposal is a business-killer that would pose significant risks to the very employees it aims to help.
I know of no one in the restaurant industry who earns less than the minimum wage right now. My tipped employees see average incomes as high as $25 to $30 an hour between base wage and tips. National data shows that wait staff at full-service restaurants earn a median of $27 an hour, with the highest-paid tipped employees making $41.50 and in some places more.
These figures aren't just numbers. They represent the livelihoods of countless individuals who rely on the tipping system for their financial well-being. Tipped employees also have a safety net for the rare occasion when their tipped income falls short of the minimum wage. The tip credit system, as outlined in the Fair Labor Standards Act and Illinois law, requires restaurant owners to make up the wage difference to bring their tipped employees' pay up to the full minimum wage for every hour they work.
Restaurants operate on slim margins
The tip credit system has been a cornerstone of the restaurant industry for decades, enabling a unique equilibrium where employees like mine can earn well above the minimum wage through tips.
My tipped employees love it, often comparing it to being a commissioned employee in sales. They are entrepreneurs who treat their workstations like their own small businesses, greeting their regular customers with their drink orders when they are seated. They know their favorite meals and their personal stories. Hard work and good service are their motivation, knowing that the return on investment is a good income to provide for their families, save for a home, buy a new car, travel and more.
If legislators force restaurateurs to increase their payroll for tipped employees to the full minimum wage, it will upend this system with an unaffordable cost. The ripple effects in my restaurant alone would reach an estimated $300,000 a year at just at one of my restaurants.
Why? The harsh reality of the restaurant industry that my fellow officeholders might not understand is that our businesses operate on very slim margins. Any increase in costs — food, labor, equipment, rent — can mean the difference between keeping our doors open or closing for good.
To stay in business and keep pace with these rising costs, the only choice will be to raise prices or reduce employee shifts or jobs altogether — not the options I want. When the cost of a meal or drinks goes up by 20% to 25%, will customers, knowing that wait staff are now being paid the full minimum wage, still tip the same amount for good service? And when tips diminish, what is the incentive for wait staff to stay in the industry?
Our business is hospitality, yet we’re going to see those great full-service restaurant experiences vanish due to proposals like the current one. It’s disheartening to see a service being replaced by touch screens, automation and other changes that are necessary to offset rising operating costs but are taking away human interaction and that personal touch that customers want.
Niles is home to 165 restaurants and bars. These are not just places where people come to eat; they are gathering spaces where memories are made and lives are shared. Behind the scenes of our local establishments are the countless workers and owners who together create a vibrant hospitality industry.
As a restaurant owner, my top priority is to ensure the well-being of my employees and the enduring success of my establishment. And as mayor, I am dedicated to championing policies that not only promote a thriving business environment but also contribute to a robust local economy.
Unfortunately, eliminating the tip credit is not the answer. Not for me as a mayor and not as a small business owner. I hope Springfield legislators vote no on this proposal so our communities can remain a place where employees, businesses and residents thrive.
George D. Alpogianis is mayor of Niles and part of the third generation of several family-owned and operated local restaurants.
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