wages

Until this spring, California port truck driver Alex Paz was considered an independent contractor. He had paid for fuel and registration of a truck, but the truck itself was owned by the trucking company. Some months, after the company deducted his costs, he ended up owing the company money.

"I didn't feel like I was working for myself," he says.

Under pressure from Paz and the Teamsters Union, the company reclassified him as an employee.

"It's a lot better because now you get paid. You know you're an employee," Paz says.

The vast majority of U.S. workers haven't seen any real wage gains since the recession. But that's starting to change, at least for low-income workers.

This week, fast-food giant McDonald's announced it will pay workers $1 more than the local minimum wage.

It joins some of the nation's other largest employers, including Wal-Mart, Target and TJX, the parent company of Marshalls and TJ Maxx. All say they will be boosting pay to at least $9 per hour this year, and some will go to $10 next year.

For Wal-Mart alone, that's a pay raise for half a million Americans.

On Thursday, President Obama rolled out his plan for strengthening overtime pay protections for millions of workers. In his view, if more workers got fatter paychecks, they could spend more and stimulate the economy.

But if his critics are right, then employers would end up laying off workers to make up for the higher wage costs. And that would hurt the already painfully slow recovery.

Which scenario is right?