26 U.S. states will unveil their latest compliance with federal minimum wage increases this week. Including the District of Columbia, the minimum wage will increase from $5.85 per hour to $6.55 per hour (at the least). This will only affect states with a minimum wage set from the federal standard, of course.

This move could not have come at a better time. Although oil prices see-sawed a little last week -- bringing the cost of gas down a dime or two for the time being -- consumers are still grappling with high gas prices, a slumping stock market, energy price increases and commodity costs that are affecting food staples. If you regularly feed a family of four with two adults making minimum wages, you know all about these price increases. But, so do all of us.

Small business owners may see this differently, though. Those places of business are also seeing costs and overhead go up, and now labor costs may take a sharp increase as well. What will some businesses do? Pass along those increased labor costs to customers as a price increase due to "economic conditions."

About a year from now there will be another minimum wage increase, will will send the minimum up another $0.70 to $7.25 per hour. Do you think the economy in the U.S. will have dug out of its small hole by then? And yes, it's a small hole even though financial companies with previously-idiotic holdings in mortgages may not agree.

On Tuesday, the federal minimum wage will increase from $5.15 an hour to $5.85 an hour, and observers are wondering what effect, if any, this will have on hiring and the economy. As you can see from Department of Labor statistics, many states already have substantially higher minimum wages, so many areas will not be impacted at all by the increase. However, many states tend to raise their minimums in response to federal increases.

A large portion of minimum wage workers (there were about 1.7 million in 2006) are female and tend to be black or Hispanic, and young. According to the Associated Press:

Minimum wage workers will get an additional 70-cent boost each summer for the next two years, ending in 2009 at $7.25 an hour. That comes to just above $15,000 yearly before taxes for a 52-week work year.

Now, someone in such a job and earning $5.85 an hour would bring home $12,168 a year before taxes. The federal poverty level for singles is $10,210, couples is $13,690 and $17,170 for families of three.

While it may seem cynical to oppose wage increases, the economics of artificial wage floors sometimes contradict what is politically popular. For instance, many restaurants will cut jobs or put off hiring new workers in response to the increase. Who benefits from that?

Wikipedia has an interesting overview of the economics of the minimum wage, and an interesting point-counterpoint list. With Democratic Presidential candidates like John Edwards emphasizing the minimum wage in their campaigns, Americans might do well to brush up on the issue.

Market sentiment seems to be favoring the bears again. My cursory research indicates that 65% of investors are again thinking about an impending decline while the other 35% are still cautiously optimistic. It's only seldom in these last few weeks that I came across the occasional person who insists that the bull charge, which began in 2002, shows no signs of relenting. Just the fact that there has been a noticeable increase in the past few weeks (even before these past few days of declines) in the volume of discussions and analysis regarding how to recognize a bear market is coming, how to prepare for it's arrival and what to do when it gets here, signals to me that investors are getting skittish. The funny thing is that it's almost a universally accepted fact that no one can truly predict a bear market turn.

I gave a warning a couple weeks prior to the last contraction that I thought one was coming. That quick downward slide in fact happened. I'm now going on record again as declaring that the bear is coming for another swipe. I expect that this time the cut will go deeper and bleed a bit longer. (Indeed, I originally wrote this post after Tuesday's sell-off, but already this downturn is longer and deeper than the last). Last time around, I sent you that message based solely on gut instinct with little else to back it up. This time, however, I'll clue you in to some of my thinking.

As expected, the U.S. Congress has become the proverbial hot potato since the Democrats took control of both houses of Congress in January -- seeing as there is a pretty staunch Republican presidential administration in the White House at the moment. Yes, fire-tipped spears have already been launched from both sides, even as "we will work together" PR statements are made.

What about a hot button business issue like the federally-mandated minimum wage? Well, in an odd scenario rarely seen, Democrats themselves are appearing to be the barrier for the passage of new minimum-wage laws.

A minimum wage package that includes an $8.3 billion package of tax incentives designed to give small businesses a boost for raising the minimum wage is at stake here -- but many Democrats want a federal minimum wage without all kinds of stipulations attached. That may happen, but in the age of special interests, it's going to be a hard battle to be won if any group wants special treatment by newer federal minimum wage laws.

Will an increase in the minimum wage, likely to be passed when the Democrats take control of Congress in January, have a strong negative impact on the economy? Probably not. Even the director of economic policy studies at the conservative think-tank American Enterprise Institute, Kevin Hassert told Reuters that, "The minimum wage will be a modest drag on the economy. There are dis-employment effects, but they are not large."

The fact of the matter is that with six new states raising the minimum wage last Tuesday, there are now 29 states that already mandate a minimum wage higher than the federal rate of $5.15, which hasn't been changed since September 1997. Prices have gone up 26% since then, so low-income wage earners have steadily been losing buying power. Their $10,700 in wages for full time work at the minimum wage puts them below the poverty level.

The hardest hit sector will be the restaurant industry, which depends on the lowest possible wages to eke out their profits. Many expect some type of tax breaks will be negotiated to appease this sector, as well as other small business sectors that would likely be hardest hit by the minimum wage increase. Even President Bush acknowledged yesterday the minimum wage increase was doable and indicated he would work with the Democrats on the anticipated legislation. Some even credit the wins in some close races to the minimum wage issue, such as the McCaskill's win over Talent in Missouri. The overwhelming support for the minimum wage ballot measures encouraged people to go the polls and vote for McCaskill. McCaskill won by less than 3,000 votes. Democrats definitely used the minimum wage issue, which was on the ballot in six key states, to help inspire their voters.

Wal-Mart Stores, Inc. (NYSE:WMT) and other low-end retailers will probably benefit from a minimum wage boost, because people who frequent their stores will have more money to spend. The flip-side of this is that increased spending could result in new inflation pressures and the Fed may need to hold the line on interest rates or possibly even raise them.

One day after Election Day and everything is upside down on Capitol Hill. The market's knee-jerk reaction today was a drop in defense stocks and pharmaceuticals due to the Democrats contrarian stance on issues key to those industries.

Another key Democratic issue that the markets seemed to overlook was the party's desire to reform the Federal minimum wage, which has not been raised from $5.15 per hour since September 1997. Notably, President Bush, who still holds veto rights on any bill passing through Congress, said today that minimum wage was an issue he could cooperate with Democratic leaders about. Additionally, six states (Arizona, Colorado, Missouri, Montana, Nevada and Ohio) approved minimum-wage hikes yesterday at a state level.

Most likely affected by a wage increase are fast food companies such as McDonald's (MCD), Wendy's (WEN) and Yum Brands (YUM); casual dining chains such as Applebee's (APPB) and Brinker International (EAT); and retail chains such as Wal-Mart (WMT), Target (TGT) and Federated (FD), to name a few.

Post provided by Eric Buscemi and TheFlyOnTheWall.com (subscription required).

Back in October of 2005, Wal-Mart CEO H. Lee Scott strongly suggested that the U.S. Congress review and enhance the current federal minimum wage -- currently at $5.15/hour -- so that Wal-Mart customers don't have to struggle from paycheck to paycheck to meet the basic needs of life. Many of these necessities are available to Wal-Mart customers, but even so, these same customers have a hard time both shopping at Wal-Mart and providing a roof over their families' heads, said Scott.

Wal-Mart Watch, a group that watches most of the moves the retailer makes, had this to say about Scott's comments: ""I find it disingenuous and laughable that Lee Scott makes these remarks while the company hires lobbyist such as Lee Culpepper who oppose raising the minimum wage," Sefl said. Sefl is a spokeswoman for the group.

So, the question is this: Was Scott really interested in ensuring its customers had more money to spend at his stores, or did he have genuine sympathy for the minimum-wage customer? Hard to say, and I'll leave it to you to make your own conclusion.

Today, eight months later, the federal minimum wage is being hotly debated by Washington, with Democrats pushing hard for the first minimum-wage increase in nearly a decade. Senate leaders threatened to block a congressional pay raise unless Republicans acquiesced to the hike.