Chicago set out three years ago to make restaurants pay servers the full minimum wage. In May, the City Council put that plan on hold, voting with one dissent to freeze the hourly pay of the city's tipped workers at $12.62 and push the end of the lower "tipped wage" back to 2030. "There is a difference between a compromise and a cave-in," Ald. Jason Ervin, the lone no vote, told WTTW. Washington, D.C., backed off the same promise to its voters last summer.
The retreat means diners will keep paying part of servers' base pay for years. In much of the country, restaurants can count tips toward a server's minimum wage, and part of every tip covers pay the restaurant would otherwise owe. Federal rules let restaurants pay servers as little as $2.13 an hour, and 16 states, including Texas, Georgia, Virginia, and Nebraska, still allow it, according to the Labor Department.
Most diners don't think of their tip that way. They think they're rewarding good service, but tips track how much diners like their server far more than how well they're served. "It creates the system where people are really having to clamor for tips," Max Hawla, a D.C. bartender for more than a decade, told WTOP last year.
Tips that cover wages and reward the servers diners like
A restaurant can't keep a server's tips, but it can use them. Under the federal rule, it can count up to $5.12 an hour of tips toward the $7.25 minimum wage, the Labor Department's fact sheet says, and every dollar it counts is a dollar of wages it doesn't have to pay. If tips fall short, the restaurant has to make up the difference, but only to the minimum. Everything a server earns above that depends on the tables.
States with a higher minimum wage can hand customers an even bigger share. Nebraska's minimum is $15 an hour, but restaurants there can still pay servers $2.13 and let tips cover the rest, about 86% of the minimum.
Even the cities that tried to end the practice still lean on the customer. In Chicago, a restaurant pays $12.62 an hour as long as a server's tips add up to at least $3.98 more, according to WTTW.
In D.C., the cash wage for tipped workers is $10.30 an hour, just a little over half of the city's $18.40 minimum, according to the Labor Department. Hawla felt what a higher base does when the city started raising it in 2023. "I am definitely more comfortable since (Initiative) 82 passed. I have a higher hourly wage, and my tips have stayed the same," he said.
Most diners believe they tip for good service, and few think about the wage. In a 2023 Pew Research Center survey of nearly 12,000 adults, 77% said the quality of the service is a major factor in how much they leave. Only about three in 10 said the same about a worker's base pay.
The service barely matters, according to Cornell's Michael Lynn, one of the country's leading tipping researchers. In a review of studies covering 2,547 dining parties at 20 restaurants, Lynn and Michael McCall of Ithaca College found that diners' ratings of the service explained less than 2% of the differences in how much they tipped. What moves tips is how much diners like their server, and Lynn's research has found that small gestures of warmth, like crouching beside the table or lightly touching a customer, raise them.
Two cities that backed away from ending the tipped wage
In D.C., 74% of voters approved a 2022 ballot measure to phase out the lower tipped wage, and the city started raising it in May 2023 Last July, after restaurant owners said the higher wage was costing them customers and jobs, the D.C. Council voted 7-5 to keep a lower wage for tipped workers, rising slowly to 75% of the minimum by 2034. "The voters told us what they wanted. And this is not it," council member Brianne Nadeau, who voted no, told Axios.
Chicago passed its own phase-out in 2023, and restaurant owners fought it the same way. In March, the City Council voted 30-18 to freeze the tipped wage, and Mayor Brandon Johnson vetoed the freeze. The May compromise holds large restaurants at 76% of the minimum for two years and gives restaurants with 21 or fewer workers until 2033. "Operators need time to adjust so they can keep their doors open and their staff employed," Sam Toia, president of the Illinois Restaurant Association, told the Chicago Sun-Times before the vote.
Restaurant owners say the higher wage is hurting them. In a restaurant association survey of about 200 full-service restaurants this spring, almost 90% said they had raised menu prices since the last tipped-wage increase and 79% said they had cut hours.
Government data tell a different story. The share of Chicago restaurants renewing their licenses rose slightly after the phase-out began, to 83% in 2025 from 81%, according to city data Johnson released, and in D.C., full-service restaurant jobs rose or held steady through May 2025.
The advocates who pushed for the change accepted the delay but want it to be the last one. "This has to be the end of the conversation," Saru Jayaraman of the One Fair Wage coalition told the Sun-Times in May.