Main Street 9

(Fortune Small Business) — With commodity, fuel and insurance costs hitting record highs, small-business owners are anxious about next week’s federal minimum wage hike, which will require employers in 26 states and the District of Columbia to raise their base to at least $6.55.

Next week’s increase of the current $5.85/hour minimum wage is the second of three consecutive annual hikes mandated by a 2007 amendment to the Fair Labor Standards Act, known as the Fair Minimum Wage Act.

When legislators nationwide began a push two years ago for minimum-wage increases, Fortune Small Business found that many entrepreneurs considered the issue irrelevant. Amid a tight labor market, most owners were already paying higher-than-required wages to attract and retain workers, even entry-level ones.

Today’s economic climate is very different. Prices for a wide range of business commodities, from gas to grain, are soaring. The Labor Department reported a net loss of 62,000 jobs in June, the sixth straight month of losses. The National Federation of Independent Business’s (NFIB) latest installment of its monthly Small Business Economic Trends found that 18% of business owners polled cut staff in June.

As next week’s wage hike approaches, small-business owners such as Joy Kealey view the mandatory increase as another frustrating pinch on profits.

Kealey owns a Boise pizza chain called Chicago Connection in Idaho, one of nine states with a minimum wage set at the federal level. Five states have no minimum wage and by default follow the federal standard, while three states have state minimum below the federal level, according to the Department of Labor. (For all but a handful of exempt positions, the federal minimum overrides the state law and becomes the de facto minimum.) The remaining 33 states have their own minimum wage rates, many higher than the new mandated minimum. In total, 26 states (plus Washington, D.C., which will raise its rate to $1 above the federal rate) will be affected by next week’s change.