Millions of American workers are about to get a federally-mandated raise, but the recession has left many wondering if and how the economy will benefit.
The raise, which will go into effect on July 24, represents the final wage hike in a three-step boost to the federal minimum wage increase passed by Congress two years ago. The minimum wage will rise 70 cents — or about 11% — to $7.25 per hour from $6.55. (Last summer, it went up 70 cents from $5.85.)
Whether Congress would have approved the wage hike had legislators known how dismal the economy would look two years later is an open question. But there's no doubt the timing is awkward.
"There's low inflation, high unemployment and this is when teens are looking for summer jobs," says Mike Gibbs, a professor of economics and human resources at the University of Chicago.
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