Federal Minimum Wage is Rising

The federal minimum wage is set to increase for the first time in almost a decade after the Democrats took the House. According to the most recent CNN poll on this issue, approximately 86 percent of people support for an increase.
The last increase in federal minimum wage was on September 1st, 1997. During the past nine years, the average price has jumped 26 percent but minimum wage stays constant all the time. The Democrats proposes to raise the minimum 41 percent, from today’s $5.15 an hour to $7.25 an hour by 2008.
Opponents against the increase argue that the higher minimum will hurt small businesses, which will be forced to raise prices, cut hiring or slash the hours of the low-wage workers. Some economists suggested a tax break for small businesses in order to help offset the side effect of increasing minimum wage. Economists also mention that indexing the minimum wage could be inflationary. Investors are not especially concern that a higher minimum wage would hurt profits at big employers such as Wal-Mart Stores, which pay more employees above minimum wage.
What’s your opinion about the rise in federal minimum wage? How do you think the rise will influence the overall economy? Do you think that the Democrats is doing the right thing to boost the sluggish economy?