Around one in five Nottingham workers are expected to benefit from a pay rise thanks to the new National Living Wage.
According to thinktank the Resolution Foundation, a fifth of the city’s working population – about 90,000 people – will benefit from the change, brought in on Friday.
Some workers have praised the move, but small business owners say it could harm the economy overall as they may struggle with the extra costs.
The new £7.20-an-hour minimum was first announced in last year’s budget and applies to workers aged 25 and over.
It is a 50p-an-hour increase on the National Minimum Wage of £6.70 an hour. Workers aged 21 to 24 are still entitled to this.
“It’s going to help people, having that extra bit of money in their pockets,” said Keighan Kelly, manager of Cow Vintage Clothing, Hockley.
“It means they can afford a bit more towards their lifestyle, going out or shopping.”
But concerns remain that smaller businesses may struggle to cope with the change.
Natalie Gasson, of the Nottinghamshire Federation of Small Businesses, said: “Thirty eight per cent of our members feel it will have a detrimental impact.
“We asked them what changes they would make to lessen that impact, and the majority of those were looking at reducing staff hours, putting off production growth and changing the way they are doing things.”
The National Living Wage is different to what is known as the ‘Living Wage’ – which is reviewed every year and is only voluntary.
It currently stands at £8.25 around the UK and £9.40 in London.