AN INCREASE in the minimum wage will hurt small business and may be a barrier to industry hiring more people, a business lobby group says.

But the $16 a week rise handed to the nation’s almost two million lowest paid workers is enough to live on, Australian Chamber of Commerce and Industry director of employment, education and training Jenny Lambert says.

“I could live on the minimum wage,” she told Nine Network on Wednesday.

The boost granted by the Fair Work Commission yesterday equates to a pre-tax wage of about $657 a week — or about 43 per cent of the average weekly pay.

The ACTU, which had argued for a $27 a week increase, says it isn’t enough, widens the gap between average and minimum wage earners and is a sign Australia is heading down the US path to an entrenched class of working poor.

Ms Lambert rejects this, saying the US hadn’t had a minimum-wage increase in years, while Australia has had six.

“Their minimum wage is about $US7 per hour, ours is about $17 per hour — really, they aren’t comparable,” she said.

Business had lobbied for a minimum-wage increase of about $6 a week.

“The Fair Work Commission didn’t do the right thing by the economy by bringing in such a substantial above average increase,” Ms Lambert said.

But the ACTU National secretary David Oliver said business profits, productivity and executive salaries were up.

“Small business got a pretty good bonus out of the recent (federal) budget so certainly they could afford the pay increase,” he told Nine Network.

Professor John Buchanan from the University of Sydney Business School said it was disappointing the FWC had remained cautious and handed down a decision which “does little, if anything, to remedy the huge increase in wage inequality that has occurred over recent decades”.

The wage rise takes effect on July 1.

The comments by ACCI’s Jenny Lambert echo those of former Families Minister Jenny Macklin, who sparked outrage in 2013 for declaring she could live on the dole — $245 a week — despite earning $6321 a week as a cabinet minister.

Ms Macklin made the comments while defending the former Labor government’s decision to move around 84,000 single parents from the parenting payment onto Newstart.