The US Federal Minimum Wage is set to go from $5.15 to $5.85 an hour this coming Tuesday. According to statistics from the Labor Dept, there were around 1.7 million people earning $5.15 or lower per hour in 2006.

At the new rate of $5.85 an hour, a full time employee would make around $10,000 or less per year after taxes. The federal poverty level for singles is also just around $10,000 a year. Some people are arguing that the minimum wage should be even higher, due to the fact that it seems unfair for a full time worker to be classified under poverty. The problem with this argument is that many businesses will simply compensate for the extra hourly expenses by raising their prices or cutting out jobs Restaurants will have higher menu prices, while grocery stores will have less people bagging groceries.

The change won’t effect every state, however. Several states have already set higher minimum wage standards. The Federal increase simply forces the states who were still at $5.15 to get with the times.

Source: AP