The US government’s decision to make the $7.25 minimum wage law applicable July 24 onwards, has initiated a series of debates countrywide, on the timing of the implementation of the law – with the economic recovery still to set in!

While the law undoubtedly spells significant financial gains for the nearly 4.5 million workers - out of a total of 129 million daily wage work force - what is being debated is whether the directive to boost wages will end up helping the economy or hurt it further.

In the opinion of some labor analysts, the minimum wage hike in the recession-hit economy will put added financial burden on small businesses, which may have to resort to job cuts.

Questioning the timing of the minimum wage raise, John A. Challenger – CEO of Chicago-based outplacement firm Challenger, Gray & Christmas – said: “The timing of this is not great in the middle of a recession. Is it better to create more jobs at the lower rate or fewer jobs at the higher rate?”

However, another group of economists believes that the raise is ‘badly needed’ so that low-wage earners can cope with the increasing costs of food, fuel, and housing. Heidi Shierholz, an economist at the Economic Policy Institute, said that the minimum wage raise is a “shot in the arm,” and that “it could not have come at a better time!”