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Minimum wage hike The new federal minimum wage went into effect Tuesday. Tuesday's hike is the first in a series of wage increases which will go into effect over the next two years. The new minimum wage law is heralded by some low-income advocates, but criticized by some business leaders as a potential financial blow. The minimum wage that took effect Tuesday boosts pay for covered, non-exempt employees to $5.85 an hour from $5.15. The next jump will occur on July 24, 2008, to $6.55 an hour, and then to $7.25 an hour effective July 24, 2009. The last wage increase was a twostep increase in 1996 and 1997. Already, 30 states and the District of Columbia have minimum wages higher than the federal minimum wage, so only 20 states, including Georgia, are affected by the first wage increase. See state minimum wage laws on page 17 Some fear the higher federal minimum wage could mean fewer hours for employees, fewer pay increases for other employees, benefits reductions, job losses and waning job creation. However, advocates of the increase assert that higher wages benefit business by increasing consumer purchasing power, reducing employee turnover, raising productivity and improving product quality, customer satisfaction and company reputation. They also assert that states with minimum wage levels higher then the federal minimum wage have had stronger small business and retail job growth than the other states.
The federal minimum wage was established in 1938, as part of the Fair Labor Standards Act, at 25 cents an hour. Tuesday's increase to $5.85 an hour is the 26th since its inception. The act also provides minimum standards for overtime entitlement and includes provisions related to child labor and equal pay.
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