Heath,
I was once told by a very wise man that "a brilliant executive always overpays employees." He told me that if you pay an employee $7.75 an hour when the employee knows he's worth $8.00 per hour, the saved money the firm receives is by far offset by the disgruntled employee's lower morale and productivity. Conversely, if the pay is $8.25, the employee in theory will do much more to prove that he is in fact worth the extra money.
A classic example is when Henry Ford raised the wages for his employees to unheard heights. People called him loony, but you know what? The absent days dropped like a brick. Quality went through the roof.
It is my personal belief that if the employee is doing the job and doing it well, she should always earn a little extra. I want employees who are loyal and happy, not ones who act to sabotage me.