Chicago Minimum Wage Rises to $17.05

Chicago’s minimum wage increased to $17.05 per hour on July 1, 2026, for employers with four or more workers, as the city also delayed a larger scheduled increase for tipped employees.

The new standard wage is up from $16.60 and follows Chicago’s Minimum Wage Ordinance, which adjusts the rate each July 1 based on the Consumer Price Index or 2.5%, whichever is lower, rounded to the nearest five cents.

The increase applies broadly across the city’s labor market. For the first time, workers in subsidized youth employment and transitional employment programs also reached the full $17.05 minimum wage, closing a previous gap that had allowed lower rates for those groups.

The most debated change involved tipped workers, including restaurant servers, bartenders, bussers and runners. Their minimum wage increased to $12.96 per hour on July 1, but a larger planned raise was delayed under a City Council compromise.

Under the original One Fair Wage timeline, tipped workers were expected to move to 84% of the full minimum wage on July 1, 2026. That schedule was changed after the City Council approved a measure in late May delaying the larger increase until July 1, 2028.

The compromise, led by 27th Ward Alderman Walter Burnett, keeps Chicago on track to phase out the tip credit, but extends the timeline. Tipped workers are now expected to receive annual increases beginning in 2028, reaching the full minimum wage by July 1, 2030.

Small businesses received an even longer transition period. Businesses with up to 21 employees will not face the next city-mandated tipped-wage increase until July 1, 2030, and their tipped workers are not scheduled to reach full wage parity until July 1, 2033.

The delay was presented as a balance between labor advocates pushing to eliminate the lower tipped wage and restaurant operators who warned that faster increases could create new financial pressure for businesses already operating on narrow margins.

Other labor rules also changed on July 1. Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance reached full enforcement, giving workers the ability to sue in civil court over paid-leave violations after a one-year employer cure provision expired.

Under that ordinance, employees accrue paid leave and paid sick leave at a rate of one hour for every 35 hours worked, with access to up to five days of each.

The city’s Fair Workweek Ordinance also updated its coverage thresholds. Workers are covered if they are employed in one of seven industries — building services, healthcare, hotel, manufacturing, restaurant, retail or warehouse services — and earn up to $33.85 per hour or $64,945.55 per year. The rules apply when the employer has at least 100 employees globally, or 250 employees and 30 locations for restaurants.

For workers, the July 1 changes mean higher base pay and stronger tools to enforce labor protections. For employers, the updates create new compliance obligations, including payroll adjustments, workplace notices, scheduling documentation and leave-accrual records.

The wage increase raises pay for Chicago’s lowest-paid workers while giving restaurants and small businesses more time to adjust to the eventual end of the tipped minimum wage.