NILES — Hundreds of thousands of people got a pay raise in Michigan Tuesday. The state's minimum wage went from $7.15 an hour to $7.40 an hour.

While employees are happy to see 25 more cents an hour, some local business owners say it's not good news for them, and it will end up costing all of us.

When Glen Hare began his shift Tuesday morning at the state line Dairy Queen in Niles, he immediately got a raise.

“For me every little bit helps honestly because I’ve been living on my own for so long,” Hare said. “Especially with me just graduating college.”

He’s among hundreds of thousands of Michigan workers benefiting from an increase in the state's minimum wage.

The 25-cent hike to $7.40 an hour makes Michigan’s minimum wage the eighth highest in the country.

But as Glen and his co-workers celebrate, they know something else will have to change.

“We have to increase prices," Hare said.

Their boss is trying to figure out how to pay for it. Owner Bob Cowan said the increase will cost him $350 more per pay period starting Tuesday.

“And that $350, I’m not sure where that's coming from,” Cowan said.

It will likely come, he says, where it came from the first time minimum wage went up in 2006 – from customers paying higher prices on the menu board.

“In the last year and a half, we've increased our prices three times,” Cowan said. “That's not a good thing but we've got to meet our bottom line and [we've] got to make a profit.”

Overall, economists say the increase won't have a big impact on Michigan’s economy one way or the other because the increase is modest, and most people already earn more.

But whether it helps or hurts, employees and employers agree — every little bit does make a difference.

Minimum wage workers in Indiana are earning nearly $2 an hour less. Indiana's wage is tied to the national minimum wage which will go up to $6.55 an hour later this month. It will go up to $7.25 cents per hour next year.