Chicago employees will receive much-needed economic relief as the Chicago minimum wage increases to $16.60 an hour from July 1, 2025, or by $0.40 above the current rate of $16.20. This annual increase, required by the city’s Minimum Wage Ordinance, will assist millions of employees in the country’s third-largest city, with tipped workers also having their minimum wage increased to $12.62 an hour. The increase is Chicago’s continuation of keeping wages higher than the state and federal minimum wage rates, supporting Mayor Brandon Johnson’s description of Chicago as “the most pro-worker city in the country.”
New wage rates take effect
The July 1, 2025, increase is implemented for employers with four or more employees and raises Chicago’s minimum wage to $16.60 per hour. This is substantially higher than Illinois’ state minimum of $15.00 an hour, which has not been revised since January 2025. The tipped minimum wage of tipped employees such as restaurant waiters and waitresses, bartenders, and other service employees will be raised to $12.62 per hour. In addition, employees in subsidized transitional employment programs and subsidized temporary youth job programs will receive $16.50 an hour.
The wage hike is following Chicago’s model that raises minimum wage every year with the Consumer Price Index changes or 2.5%, whichever is lower. This is an automatic revision clause that keeps wages aligned with inflation without dwelling on uncertainty of frequent wage revisions.
Wider worker protections expand
Apart from the minimum wage hike, Chicago’s Fair Workweek ordinance also increases revised compensation amounts on July 1, 2025. Workers making $62,561.90 per year or $32.60 per hour or less shall be covered under scheduling and compensation regulations, assuming that they are employed in covered sectors such as building services, healthcare, hotels, manufacturing, restaurants, retail, or warehouse services.
The city’s One Fair Wage policy is gradually phasing out the tip credit system. Tipped workers’ wages will be raised by 8% annually until it becomes the same as the standard minimum wage rate by July 2028. The phased-out approach tries to achieve income security for service workers while providing a time frame for reorganization of remuneration to enterprises.
Historical context and regional comparison
Chicago’s minimum wage path reflects steady dedication to workers’ well-being. The city already raised its minimum wage to $16.20 in July 2024 from $15.80, abolishing the two-tiered wage structure once discriminating against small and large businesses. All covered employees are guaranteed equal starting pay under a single standard.
Compared to the surrounding cities closest to it, Chicago pays much more than the majority of Illinois cities. While Cook County and the other larger Illinois cities such as Aurora, Rockford, and Springfield pay the state minimum of $15.00 an hour, Chicago’s $16.60 is a further $1.60 an hour, or about $3,328 per year for full-time employees.
Economic impact and implementation
The wage raises are during Chicago’s metropolitan statistical area employment that was relatively stable, with 4,817,600 total nonfarm jobs in November of 2024. Workers must be notified ahead of time in writing before July 1 of such wage increases by the employers and maintain required workplace postings that notify workers of their rights under several labor laws.
Chicago’s raise of the minimum wage to $16.60 isn’t merely a cost-of-living raise—it’s the city’s overall display of economic justice and workers’ dignity. With millions of Chicago workers who will gain from the increase, the policy keeps Chicago out ahead of progressive labor policies. The pairing of short-term relief of wages with long-term structural reforms such as the One Fair Wage ordinance shows that cities can actually stand up for working families without penalizing economic competitiveness.
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