The good and bad of the minimum-wage increase

07/27/2009 | Wall Street Journal, The

While struggling small businesses may have to cut payroll costs to afford the minimum-wage increase that went into effect in 31 states Friday, economists say a positive is that workers may boost sales because their morale is up and they may spend more money themselves. "For small firms, labor [already] accounts for 80% of their costs," says NFIB chief economist Bill Dunkelberg. "For them, if the minimum wage goes up by a buck, their bottom lines go from $50,000 to $30,000."

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