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LIANE HANSEN, host:

Minimum wage workers are set to get a pay bump later this week. On Thursday, the federal minimum wage will go from $5.85 to $6.55 an hour. Phyllis Tamplin(ph) runs her family-owned restaurant in Prattville, Alabama. She fears higher wages may force her and other business owners to raise prices.

Ms. PHYLLIS TAMPLIN (Restaurant Owner, Prattville, Alabama): The majority of my vendors have gone up on their prices. I've tried to hold mine where they are now. I mean, I'm fighting as far as I can but, of course, it's eating our profits more because, I mean, you're talking about 70 cents per person. Our average employee works 45 hours a week, which means that's five hours of overtime. And so naturally, that's going to take another little chunk out of your profit.

HANSEN: Joining us now is Sylvia Allegretto, an economist at the Institute for Research on Labor and Employment at the University of California, Berkeley. Welcome to the program.

Ms. SYLVIA ALLEGRETTO (Economist, Institute for Research on Labor and Employment, University of California, Berkeley): Thank you for having me.

HANSEN: The federal minimum wage was raised by the same amount, 70 cents, about a year ago. What would be different about this increase? I mean, given the current economic challenges.

Ms. ALLEGRETTO: Well, that's true. This is the second of three phases over 2007, 2008 and 2009. These three phases come on the heels of a 10-year hiatus. From 1997 to 2007 the minimum wage was stuck at $5.15, but over that time the prices of goods and services increased by about 28 percent. So those low-wage workers were falling further and further behind every year that the minimum wage didn't increase.

HANSEN: What about the fact that some studies do show that the higher minimum wage could hurt low-wage workers because business will eliminate jobs that cost too much?

Ms. ALLEGRETTO: Yes, well, we find that actually, that's not what's happening. It used to be economists kind of had a consensus that we did have some small negative employment effects when we had increases in the minimum wage. But what our new research shows, while we do see a little bit of an hour disadvantage, meaning that employers may cut back a little bit on hours, this is overcome by the fact of the higher minimum wage, so workers are better off in the end. They may be working a little bit less, but with the higher minimum wage they're actually making more money.

HANSEN: Give us some examples of employers who pay minimum wage.

Ms. ALLEGRETTO: Minimum wages are paid throughout the industrial sectors in all occupations but they're concentrated in the retail trade, leisure and hospitality industries, concentrated in the sales and service occupations. We do know that there are some manufacturing jobs that probably do pay minimum wage these days but clearly, these workers are concentrated in sales and service and retail.

HANSEN: Do you know, I mean, just a ballpark figure? How many workers are we talking about here that will actually benefit?

Ms. ALLEGRETTO: When we look at minimum wage workers, workers that are making around 10 percent of the minimum wage or just above the minimum wage, it's about 13 million workers who will be affected by this total phase-in, meaning the phase-in including next year when we go to $7.25.

HANSEN: This is a substantial number.

Ms. ALLEGRETTO: It is a substantial number. I think the important thing is that it's not just all teens. About a quarter of them are parents. They are part-time as well as full-time - over 50 percent are full-time workers, and we also see that it's disproportionably women and many of these are single-parent women. There's a lot of working families so to have real increases for them, to have these minimum wage hikes is very, very important.

HANSEN: Economist Sylvia Allegretto is with the Institute for Research on Labor and Employment at the University of California, Berkeley. Thank you for joining us.

Ms. ALLEGRETTO: Thank you.

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