About 2 million Americans get a raise today as the federal minimum wage rises 70 cents. The bad news: Higher gas and food prices are swallowing it up, and some small businesses will pass the cost of the wage increase to consumers.
The increase, from $5.85 to $6.55 per hour, is the second of three annual increases required by a 2007 law.
Next year's boost will bring the federal minimum to $7.25 an hour, giving more than 5 million workers a raise, said Lisa Lynch, dean of the Heller School for Social Policy and Management at Brandeis University in Waltham, Mass.
The increase, however, is "a drop in the bucket compared to the increases in costs, declining labor market and declining household wealth that consumers have experienced in the past year," said Lehman Brothers economist Zach Pandl. The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.
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