New minimum wage begins Friday

TERRE HAUTE, Ind. (WTHI) - Employees are happy about the rise in minimum wage, but some businesses are worried about the cost.

New federal rules begin Friday. Indiana workers making the minimum wage will get an extra 70 cents an hour. The federal minimum wage goes up to $7.25 an hour from $6.55.

Allison Harper is making more money for the same work at Dean's Party Mania. Her pay is going up by more than 10 percent.

"I think actually lots of people will be surprised with how much a dollar increase makes," said Harper.

It's not quite a dollar this time, but it's the final of a three-part planned hike by federal laws to increase wages, which were $5.15 as late as July 2007. But this part comes at a bad time for many employers across the Wabash Valley.

"I'm afraid that down the line it will have a little bit of an effect on consumers because we'll have to pass the costs onto them," said Dean's Party Mania manager Tonya Pearson.

For someone who works 40 hours a week, a 70 cent increase means an increase in weekly pay of $28. But multiplied by 52 weeks a year, it adds up to almost $1500.

"They still take out all the taxes," said Harper. "But it still in the end makes a huge difference."

More money for Harper to put back into the economy on things like gas, clothes and movies. Pearson said employees like Harper deserve it, but if things don't turn around, hours may have to be cut to balance the added expense.

"It's a bad time for everybody on the business end of it," said Pearson.

The wage hike does not affect Illinois workers because the state minimum is already at $8 an hour. Their wages will go up to $8.25 in July 2010.