Some paychecks will be bit meatier after tomorrow, when the federal minimum wage increases, affecting thousands of workers and businesses in Virginia, and maybe consumers, too.
The minimum wage will jump 70 cents, from $6.55 to $7.25 an hour.
As mandated by Congress, this will be the third increase in the minimum wage since July 2007, when it rose for the first time in a decade, from $5.15 to $5.85 an hour. In July 2008, it went to $6.55.
William F. Mezger, chief economist at the Virginia Employment Commission, estimated that more than 500,000 Virginians will see their paychecks affected by the increase, with most of the minimum-wage earners in rural areas and small towns.
The likely economic impact of the increase depends on whom you ask.
Employers have known that the wage increase was coming for a long time, but "once it goes up, there will be a ripple effect," said Barry Hawkins, executive director of the Virginia Hospitality and Travel Association.
For businesses with even a few minimum-wage earners, the effect is to put upward pressure on the salaries of all workers, he said.
"It will eventually increase the amount that people are paying for products" as employers pass on higher costs to consumers, he said.
But raising the minimum wage could stimulate the economy because lower-wage earners are more likely to spend the additional pay on essential goods and services, said Ty Jones, a staff attorney for the Virginia Poverty Law Center.
That spending "goes right back into the economy quicker than the disposable income of people that are in higher income brackets," she said.
Mezger said the previous minimum-wage increases had little impact on overall employment levels.
But there are likely more people earning at or near minimum wage now compared with a few years ago, because the rate already has been raised twice since 2007.
"There may be some job loss this time simply because a lot of small merchants and small employers are still up against the liquidity problem," he said.
Margaret Chabris, spokeswoman for the 7-Eleven Inc. convenience-store chain, said none of its employees are paid the current minimum wage at its 1,400 company-owned stores in the U.S., including 389 in Virginia.
Just a few employees are paid at the new minimum wage, so there is not much impact on the company.
But that may not be the case at its 5,700 franchised stores, 256 of which are in Virginia.
"If they are paying minimum wage, their costs of doing business could increase, unless they cut back on some of their employees' hours or manage other costs of doing business, like utilities," she said.
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.
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