Minimum Wage Hike Could Mean Fewer Jobs


When the federal minimum wage rises to $7.25 later this month, the job market could get even worse, especially hurting those laid off and resorting to part-time and low-wage jobs for extra income during their job search.

The federal minimum wage is set to rise on July 24, from $6.55 an hour to $7.25. Americans living in states with their own minimum wage laws will most likely get the greater of the two amounts.

But since an unemployment rate of 9.5% is cutting consumers’ spending at your local Applebee’s or Starbucks (Stock Quote: SBUX), for example, these companies could reduce their staffs to skeleton crews to keep costs down, notes The Wall Street Journal.

Exceptions to the Minimum Wage Rules
And while the minimum wage is set to rise, more companies could choose to take advantages of certain exceptions that allow them to pay students and the disabled less than minimum wage.

Full-time students working in retail, service, agriculture, or colleges, for example, may be paid as little as 85% of minimum wage if their employer gets special certification allowing it, according to the U.S. Department of Labor. The certificate would also limit a student’s work hours to eight hours a day and 20 hours a week during the school year and 40 hours a week when school’s out.

Those with physical or mental disabilities including blindness, mental illness, alcoholism and drug addiction could get less than minimum wage if their disability affects a company’s earnings or productivity and their employer gets certification.

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