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Many workers see minimum-wage hike

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TESS VIGELAND: One more reason to cheer the new year? Many of America’s least-paid workers just got a raise. The minimum wage went up today in about a dozen states. In some cases, it’s a couple dollars or more higher than the federal benchmark of $6.55 an hour. But some observers say the change will hurt more than it will help.

Marketplace’s Jeff Tyler explains.

JEFF TYLER: Many states approved increasing the minimum wage years ago by tying it to the consumer price index.

RICK BERMAN: They have put the minimum-wage law on auto-pilot.

That’s Rick Berman with the Employment Policies Institute. He says small business owners are already struggling to support higher costs for things like rent and energy.

Berman: You can do with fewer employees. And that’s what happens, especially to the low-skilled people in the workforce. They’re the first ones to go.

Santa Fe, N.M., now has the nation’s highest minimum wage, at $9.92 an hour. As wages went up, some restaurants cut back.

Roland Richter owns Joe’s Diner and Pizza.

ROLAND RICHTER: We made adjustments in the menu. We made it smaller. We aren’t open as many hours as we used to be.

Richter made these changes in order to reduce staff.

Richter: We used to have as many as 40 people here. And now we’re down to about 26.

But not everyone agrees that higher minimum wages automatically lead to layoffs. Harley Shaiken is a labor economist at U.C. Berkeley.

HARLEY SHAIKEN: There’s a lot of academic research that indicates that previous raises in the minimum wage have, in fact, not resulted in lost jobs — or in some cases, can even create jobs.

And he says it stimulates the economy.

Shaiken: Minimum-wage workers spend that money.

That’s not much consolation to Ken Belisle with Landmark Restaurants. He oversees four eateries in Spokane, Washington, where the state minimum wage just got bumped up by 48 cents to $8.55 an hour.

He faces competition from nearby Idaho, where the minimum wage is $2 lower.

KEN BELISLE: You get kind of an influx of their folks coming here to want to work. And you get an influx of our guests and customers going there to eat, because you’ll see a difference in the prices.

In July, the federal minimum wage is set to increase to $7.25 an hour.

I’m Jeff Tyler for Marketplace.

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