Timing of minimum wage increase 'unfortunate' for SMBs

Many small businesses are going to see another hit to their working capital this week as the federal minimum wage will rise to $7.25 on Friday, July 24.

The increase will be the third and last under the Fair Labor Standards Act, which has raised the minimum wage incrementally each July since 2007.

Many small business owners who have already found themselves struggling to make ends meet are not happy about the added expense.

"It's obviously a concern for a lot of small businesses, particularly given the bad economy," Molly Brogan, vice-president of public affairs at the National Small Business Association, told Business Week magazine. "I think the minimum wage increase coming on is adding insult to injury," she said, adding that its timing is "unfortunate."

However, small business owners can find solace in the fact that some consumers will have extra money in their pockets - to the tune of approximately $120 per month - to spend on reviving the economy.

The economy is already progressing on that front, said the Bureau of Economic Analysis, whose latest report found that disposable personal income increased 1.6 percent and consumption edged up 0.3 percent.