EAST LANSING, Mich. (AP) — Starting Tuesday, hundreds of thousands of Michigan workers who make at or just above the minimum wage are getting a raise.

That's 25 cents more an hour to help Adam Richard, a cashier at Ned's Bookstore in East Lansing, cover the rising cost of groceries as well as gasoline that now rings up at more than $4 a gallon.

"It means a little bit more money, but it means everything will cost more, too," Richard, 23, said Monday.

He graduated from Michigan State University in December and is working 30 hours a week at the bookstore across the street from the sprawling campus before heading to law school in the fall.

The state's hourly minimum wage rises Tuesday from $7.15 to $7.40. The raise is the last of three put in place under a 2006 state law that bumped the minimum wage from $5.15 an hour.

About 58,000 workers in Michigan make the minimum wage, the lowest amount that employers legally have to pay. The increase also helps another 209,000 people such as Richard who earn more than $7.15 but less than $7.40, according to the nonpartisan Economic Policy Institute in Washington.

Richard, for example, is going from $7.35 per hour to $7.60 on Tuesday. Another 482,000 workers who make at least $7.40 an hour are expected to get a spillover pay raise as employers pay more because the floor has been raised, according to the EPI.

The biggest effect is in the service industry — hotels and restaurants — along with nursing homes and businesses that employ waitresses, busboys, janitors, teachers' aides and home health care workers.

While workers are getting more money in their pockets, businesses warn the higher wages mean they'll have to lay people off, cut back employees' hours, raise prices and put off planned renovations.

"Restaurants are doing everything they can now to survive," said Andy Deloney, spokesman for the Michigan Restaurant Association. "It's a mandatory increase in their labor costs at a time they don't have the money."

Businesses partly blame the minimum wage increases for the state's 8.5 percent unemployment rate, the highest in 16 years. A rush of people looking for summer jobs last month swelled the size of Michigan's labor force; the unemployment rate then rose when many of them couldn't find jobs.

"Is it the only factor to have an impact on unemployment? No. But arguments that it would improve the economy don't seem to have panned out at all," said Rich Studley, executive vice president of the Michigan Chamber of Commerce. "Part of the problem is Michigan has a bad case of self-inflicted wounds."

Michigan's new wage ties Rhode Island for eighth-highest in the United States. The $5.85 federal minimum wage rises to $6.55 this month and to $7.25 in July of next year.

The state's debate over increasing the minimum wage partly involves conflicting views of who benefits.

Businesses see the typical minimum wage earner as an inexperienced teen living at home with a summer job or an older worker no longer wanting to work full-time. About four in ten are aged 16 to 25.

Advocates for the poor see that wage earner as a single mother without health care who can barely scrape by even with government assistance. Four in 10 minimum wage earners work full-time. A quarter are parents. Four in 10 live in households with incomes in the bottom 20 percent of the population.

People working 40 hours a week will earn an extra $10 per week under the new minimum wage and make just under $15,400 a year.

"When you look at $10 a week, after taxes it's essentially a gallon-and-a-half of gas," said Pam Smith, executive director of the Child Care Network.

Many minimum wage earners are single, working parents without health care benefits who also are trying to go to school, said Smith, whose organization helps low-income and other families find child care in Ann Arbor, Jackson and other areas in southern Michigan.

While she understands the stress the higher minimum wage puts on businesses, "we have to pay workers for the hours they put in," Smith said.

Also rising Tuesday is the minimum wage for workers under 18, which pays less than the adult minimum wage. It goes from $6.08 to $6.29 an hour, then jumps to $6.55 on July 24 when the federal minimum wage increases, superseding the state youth wage.

The lower wage was created in 2006 to help small employers that couldn't afford to hire young workers at the higher minimum wage.

Democratic Gov. Jennifer Granholm, who signed the minimum wage increases — the first since 1997 — said the latest increase will help workers keep pace with the rising cost of groceries and gasoline.

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David Eggert can be reached at deggert(at)ap.org

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On the Net:

State Wage & Hour Division: http://www.michigan.gov/dleg/0,1607,7-154-27673---,00.html

Economic Policy Institute: http://www.epi.org

Michigan Chamber of Commerce: http://www.michamber.com

Michigan Restaurant Association: http://www.michiganrestaurant.org

Gov. Jennifer Granholm: http://www.michigan.gov/gov