Evanston is considering a nearly 22% minimum wage increase and eliminating the subminimum wage for tipped workers. The idea was sparked by Councilmember Devon Reid, whose referral is making its way through Evanston’s municipal committees.
The proposal isn’t gathering support on all fronts. Restaurant owners, like The Lucky Platter’s Derek Gaspar, are left wondering who the referral would benefit, saying increased wages could cause businesses to cut back on jobs and increase prices.
“My employees are my responsibility and I want to pay them as much as possible,” Gaspar said. “If there’s a better way to do things, I’m totally open. My concern is once I started doing the math on taking away this subminimum wage, I couldn’t see how things add up.”
Reid hopes to raise the minimum wage from $13.35 to $16.25 an hour for employers with 51 or more employees, $15.50 for employers with 50 or less employees and $15 for youth workers, according to a memo prepared by Economic Development Manager Paul Zalmezak. Reid, at a July 10 town hall, said he is also looking to eliminate the subminimum wage, meaning the minimum wage for tipped workers could increase from $7.40 to $16.25 an hour.
Wages would also be subject to an annual increase of 2.5% or the Consumer Price Index, whichever is lower, the memo states. The annual increase, as well as the proposal as a whole, is an effort to address the rising cost of living in Evanston, Reid said.
“We shouldn’t be playing political football with the minimum wage,” Reid said. “It should be regularly considered and we should tie it to something reasonable like 2.5% or the Consumer Price Index.”
Chicago’s new minimum wage went into affect July 1, bumping it up to $15.80 an hour for most workers while also holding similar discussions around the base pay for tipped workers.
Gaspar’s own food service career had a stint as a server, and he said tipped employees made more than hourly workers at every restaurant he’s worked at. Servers at The Lucky Platter average roughly $38 an hour with tips, Gaspar said.
More Top Picks Best Lifting Straps For Deadlifts
With this in mind, Gaspar worries about the repercussions a proposal like Reid’s could have on restaurant workers. Reid’s proposal wouldn’t put an end to tipping, but it would raise the standard hourly wage and place a potential burden on business owners.
“Businesses might raise prices to cover the costs,” Gaspar said. “I already raised prices due to inflation and received pushback for that. Customers might go away because they can’t afford it. If I lose customers, I lose money. If I lose money, there’s less money to pay people.”
“When there’s not enough money to pay people, what happens is you cut hours or jobs.”
Gaspar said cutting staffing could reduce the need to raise prices, but even if a business owner raises prices he says the potential customer loss poses could lead to worker cuts. Another business solution, Gaspar says, would be to eliminate widespread tipping and implement a service charge to fund the minimum wage increase for tipped workers.
Non-tipped establishments also raised concerns about the minimum wage increase. Jennifer Gould, a Burger King franchisee, expressed similar sentiments to Gaspar.
“The prices of goods and services go up as wages rise, how much are people going to pay for a Whopper from Burger King?” Gould said. “We’ve had to raise our prices several times over the past three years.”
Reid’s proposal would include a transition year where the minimum wage would be $16 an hour for large employers, $15 for small employers and $14 for youth.
Reid hosted a Zoom town hall focused on the minimum wage where he brought in Saru Jayaraman, president of One Fair Wage, to speak about ending the subminimum wage. The two voiced concerns about poverty levels and how tipped workers are treated by customers.
“Women (in a 300,000-person survey) said they were regularly asked to take off their masks during the pandemic by customers so they see how cute they are,” Jayaraman said. “Customers would say, ‘Before I decide how much to tip you, take off your mask so I can see the pretty face of my server.'”
Jayaraman says if tipped workers have the financial support of the full minimum wage, they wouldn’t have to put up with harassment from customers because they’d have a full wage regardless of how much they’re tipped.
When sales went down during the initial COVID-19 pandemic, Jayaraman said One Fair Wage survey participants reported a 50% loss in tips. She says this shows a need for consistent fair wages for tipped workers.
The Center for American Progress analyzed data comparing states without a subminimum tipped wage and those with subminimum wages. The CAP found states without subminimum tipped wages saw lower poverty levels and a 0.6% higher job growth in small businesses. Large businesses with more than 20 employees saw 0.7% higher job growth rate in states without a subminimum wage, according to the CAP. Women in states with a subminimum wage of $2.13 are roughly 6% more likely to experience poverty than states without a subminumum wage, the CAP said.
California, Alaska, Hawaii, Minnesota and Oregon are some of the states that have already eliminated the subminimum wage, according to the CAP.
Corey Schmidt is a freelance reporter with Pioneer Press.