So what does this mean for you? It all depends on whether you have a job or not.
“I have an hourly job that pays minimum wage.”
Then this is great news for you. You got a raise without doing a thing! Part-time workers could also stand to gain from this. To cut costs, companies may be more willing to promote their part-time employees and make them full time as opposed to hiring new part-time employees. Part-time hourly workers just may end up with a raise and a promotion.
Be cautious before spending all of your new paycheck though. A higher minimum wage means that companies, already struggling because of the economy, may decide to let some of their employees go.
“I'm still searching for a job.”
Then the change probably didn’t help you. According to the Wall Street Journal, studies show that increasing the minimum wage usually has a negative effect on the job market. Numbers from the Journal of Labor Research show that a 10% increase in the minimum wage usually results in a 0.9% to 1.1% decline in retail jobs. Fewer jobs mean it's going to be even harder to find a job then it already is now. But if you do manage to score a job, you'll immediately be reaping the rewards of the minimum wage increase.
“What if my state has a lower minimum wage?”
Employers are required to pay workers whichever wage is the highest, federal or state. Fourteen states, along with Washington, D.C., currently pay workers more than the new minimum. It remains to be seen if these states will raise their minimum wages anytime soon.
The state with the highest minimum wage is Washington, which requires employers to pay workers at least $8.55 an hour. Some cities have decided to make employers pay minimum wage workers even more than that. In Santa Fe, New Mexico, the minimum wage is $9.92 an hour - that's $20,633.60 a year before benefits and taxes.
“So what about the money?”
It might only be a 70-cent raise, but it could mean an extra $1,456 for you a year before taxes. If you used to earn the old minimum wage of $6.55, that means you would have made $13,624 year working 40 hours a week. At $7.25 an hour, if you work 40 hours a week, you’ll make $15,080 a year before benefits and taxes. Nationwide, the average work week is only 33 hours, which adds up to $12,441 a year before benefits and taxes.
Seventy cents may not seem like much, but just remember that when the minimum wage was first created in 1938, workers only got 25 cents an hour!