ATLANTA (AP) - Some economists say the increase in the federal minimum wage taking effect today could prolong the recession.
That's because, they fear, it could force small businesses to lay off the same workers that the hike was meant to help.
The increase to $7.25 means 70 cents more an hour for the lowest-paid workers in the 30 states that have lower minimums or no minimum wage. It also means higher costs for employers who feel they've already trimmed all their operating fat.
Minimum wage advocates say the increase will keep more working poor afloat. They say more increases are needed to help stimulate consumer spending and strengthen businesses in the long run.
The negative fallout could be especially tough in the seven states where the pay increase coincides with double-digit unemployment. They are Alabama, Florida, Georgia, Indiana, North Carolina, South Carolina and Tennessee.
(Copyright 2009 by The Associated Press. All Rights Reserved.)