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It would hurt the economy because companies would outsource and layoff more people. Instead of hiring 10 people, they would only get 8, unless the other 2 would bring in a lot more money.
And it hurts the people who aren't working. Retirees, unemployed, injured, new immigrants, people with no money... Why, because if the workers can afford to pay more for products, and the supply doesn't increase, then prices go up.
And what incentive do people have to work hard if given the choice between going to college and getting an office assistant job making $12/hr with $25,000 in student loans, or getting a job at 18 making $7.25/hr. With 4 years of experience, they would probably be able to get $9-$10/hr.
On the other hand, this would be a good thing, because I would rather have the workers making more money, then just having the owners and investors making it all. The workers will still spend all of the new money, so the CEOs and other businessmen/investors will get the money in the end eventually anyway. (Trickle down economies don't work very well, trickle up ones do)
And workers who are financially secure could hold out and not be desperate for any job at any wage. They could afford to look around.
And it would make the country stronger if there isn't a large poor community in certain areas. Yes, giving them $2 more an hour won't do a whole lot, but it's a start.
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