The United States federal minimum wage increase goes into effect today, but will you be better off? The new minimum is $6.55 per hour. If you are paid minimum wage your increase may turn out to not be an increase at all.

With the inflation rate at 4.90% (July, 2008), your 12% increase ($5.85 to $6.55) turns into a 7.1% increase. However, the increase is not even that great. Inflation has outpaced minimum wage increases for years, so overall minimum wage workers are earning less every month.

There are states that tie the minimum wage to inflation, so your increases will go up as inflation increases. Florida, Oregon, Vermont and Washington each tie the minimum wage within the state to the Consumer Price Index. The Consumer Price Index is composed of the cost of food and beverages, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services

Many other states and urban areas have their own minimum wages that are higher than the federal minimum wage, so you will not be affected. Even smaller towns like Santa Fe, New Mexico have minimum wages well above the federal minimum wage to accommodate for the local economic environment.