Minimum Wage Rises 70 Cents on Friday

SAVANNAH, Ga. - A federal minimum wage increase goes into effect Friday. It's an increase some economists say may prolong the recession.

Economists are worried the new rate will force small businesses to lay off workers. It's a 70 cent increase to $7.25 and hour. The increase was part of 2007 legislation that was passed in better economic times.

Georgia is one of 30 states where workers will see higher pay, and the change does not just help full-time workers. About half of those earning minimum wage are part-time workers.

At Leopold's Ice Cream on Broughton Street, the legendary ice cream parlor is still thriving at 90 years-old, with 22 employees keeping the tradition going.

Manager Darryl Siddel says 25 percent of his workers are making minimum wage, and with the higher wage taking effect, every employee will get a raise.

"It'll affect us just like everybody else in the community, but it's something we have planned for. We knew it was coming, just like everybody else and we have budgeted those extra expenses in," said Siddel.

College student Mike Petitto is one of those minimum wage earners. He started working here part-time in April.

"I'm from Massachussetts. I go to college down here, and up home the minimum wage was just bumped up to $9.25 I think an hour, so coming back down here where it's $5.25 is a bit of a disappointment but what can you do?" said Petitto.

He says he's really looking forward to the extra money coming to his paycheck.

"It's great, because I have to pay my rent, and I've got bills and honestly it wasn't enough. I'm a student. I have to buy food, and all that so the extra money is definitely going to help out and help with college," he said.

While Leopold's is prepared to pay more, they know higher labor costs pose a challenge for other businesses.

"I understand that it's difficult for many people and businesses who are operating right on the edge, and they're trying to keep themselves and their employees still employed and that's a difficult thing," said Siddel.

The government estimates a family with a full-time minimum wage earner would see its monthly income increase by about $120. Officials say the minimum wage increase will benefit many working women, because they make up two-thirds of minimum wage earners.