Chicago’s minimum wage will increase July 1, hitting $15.80 per hour for many workers across the city.

The annual bump comes as Chicagoans experience a strong labor market despite layoffs in certain industries, such as Big Tech. Though inflation has cooled off historic highs, prices remain elevated. The minimum wage will increase 2.5% on the first of the month, a percentage that does not match inflation, which grew at a 4% annual rate in May.

“This is a minimum,” said Kenneth Meyer, commissioner for the city’s Department of Business Affairs and Consumer Protection.

“In this particular economy with low unemployment, a lot of the small businesses ownership that I talk to every day are still having a hard time hiring, and so frequently are actually now paying more than the minimum wage,” Meyer said.

As of May 2022, the average wage for retail salespeople in the Chicago area was $17.49 per hour, according to data from the Bureau of Labor Statistics. Cashiers made $14.91 on average and child care workers made $15.30. The data includes nine counties in Illinois in addition to some areas in Indiana and northern Wisconsin; it therefore includes parts of the region where the minimum wage is significantly lower than it is in the city of Chicago.

Chicago is also seeing a renewed push to raise base wages for tipped workers, such as bartenders and restaurant servers, who are subject to a lower minimum wage than their non-tipped peers.

Employers must make up any difference between the subminimum wage and the standard minimum wage, though advocates say this doesn’t always happen. According to the BLS data, bartenders in the greater Chicago area were making an average of $16.28 per hour in May 2022, including tips, while waiters made $15.53.

Minimum wage laws vary depending on what city or town you work in, how large your employer is and what kind of work you do. The rules can be complicated, so here’s what you need to know.

What is the new minimum wage in Chicago?

Under the city’s minimum wage ordinance, the minimum wage for large employers increases at the rate of inflation or 2.5% each year, whichever is lower.

People who work for larger employers — that means employers with at least 21 employees — must earn at least $15.80 per hour as of July 1, an increase of 40 cents per hour. People who work for employers with between four and 20 employees must be paid at least $15 an hour, an increase of 50 cents per hour.

All domestic workers, regardless of the size of their employer, must be paid the higher minimum rate of $15.80 per hour.

Tipped workers in Chicago will also see an increase, and must be paid at least $9.48 per hour at large employers and $9 per hour at smaller employers as of July 1. If tipped workers do not receive enough tips to make up the difference between their hourly wage and $15.80 at large employers or $15 an hour at smaller ones, their employer must make up the difference.

Are there exceptions?

Yes. Youth workers 24 or younger who work jobs coordinated by nonprofits or government agencies must make at least $13.50 per hour as of July 1.

People who work for employers with fewer than four employees are subject to the Illinois minimum wage, which is $13 per hour, Meyer said.

The minimum wage can be waived as part of a collective bargaining agreement, but only if that waiver is written out explicitly in the agreement.

What about the suburbs?

The minimum wage changes depending on the suburb.

The minimum wage throughout much of Cook County will rise to $13.70 for non-tipped workers and $8 for tipped workers July 1.

As of this month, the following municipalities are bound by the Cook County minimum wage: Barrington Hills, Berwyn, Countryside, Deerfield, Dolton, Evanston, Glencoe, Kenilworth, McCook, Northfield, Oak Brook, Oak Park, Phoenix, Skokie, University Park, Western Springs, Wilmette and Winnetka, according to Julia Epplin-Zapf, a policy analyst for the county’s Commission on Human Rights.

However, suburbs are permitted to opt out of the county’s minimum wage, said Epplin-Zapf. Suburbs that have opted out of the county minimum wage must set wages at a level equal to or higher than the state minimum wage, she said.

The minimum wage in Illinois is $13, or $7.80 for tipped workers. Teenagers under 18 who work fewer than 650 hours per year can be paid less than the standard state minimum at $10.50 per hour. The state minimum wage is scheduled to increase to $14 per hour Jan. 1.

What is going on with the tipped minimum wage?

In most U.S. states including Illinois, employees who earn tips can be paid lower base wages than other kinds of workers. That lower rate is called the tipped or subminimum wage. Legally, employers must make up any difference between the subminimum wage and the standard minimum wage that isn’t covered by an employee’s tips.

Nationally, the subminimum wage is $2.13 per hour. In Chicago, it will rise to $9.48 or $9 on July 1, depending upon the size of the employer.

Advocacy groups have been pushing to eliminate the tipped minimum wage across the country, arguing that reliance on tipping leads to unpredictable earnings for workers and can force service staff to put up with harassment or rude behavior from customers because they depend upon tips for a significant portion of their earnings. Bills to phase out the subminimum wage were introduced in at least nine U.S. states, including Illinois, during recent legislative sessions.

In 2019, some members of City Council pushed to phase out the subminimum wage in the city. The provision was removed after heavy lobbying from the restaurant industry. Now, some aldermen are reviving that effort. At City Hall last week, some members of City Council spoke alongside local restaurant workers and owners, pledging to introduce an ordinance that would end or phase out the tipped minimum wage.

“This issue has been a long time coming and workers need to see a raise, particularly in the restaurant industry,” said Ald. Carlos Ramirez-Rosa, 35th. Ramirez-Rosa said the timing and language of a potential ordinance were still up in the air.

Sam Toia, president of the Illinois Restaurant Association, said the industry group was “willing to listen and discuss.” Toia said he was concerned about how such a measure could affect smaller neighborhood restaurants.

“We don’t think it’s a good idea,” Toia said about a potential ordinance, “but we are pragmatic.”

Where can I direct questions or complaints?

In Chicago, workers with questions about the minimum wage can call 311 or use the Chi 311 app, Meyer said. A member of the Office of Labor Standards will return their call, he said.

Employees working in other parts of Cook County can contact the Commission on Human Rights at 312-603-1100 or human.rights@cookcountyil.gov.

Employees can also contact Arise Chicago, a workers’ center that has received a city grant to educate the public on Chicago’s labor laws. Arise can be contacted at 773-769-6000 via call or text or workercenter@arisechicago.org, said communications director Shelly Ruzicka.