Federal minimum wage increased from $6.55 to $7.25 per hour, Friday, but some say the 70 cent increase may be bad for the economy.

The change brings an 11 percent pay raise for millions of employees across the U.S., which analysts fear could lead to more layoffs from businesses who can't afford to pay more.

"How will they absorb the increase?" asked Rajeev Dhawan, director of Georgia State University's Economic Forecasting Center. "They will either hire less people or they will do less business."

Congress approved the increase two years ago under the Bush administration, before much of the damage of the country's recession had been done.

Now, the extra labor costs could have major consequences.

CBN News spoke with Phil Kerpen of Americans for prosperity about these potential effects.  Click play for his comments.