Wages for fast-food workers in California will increase to a minimum of $20 per hour beginning April 1. Could this change potentially pave the way for workers across the country?

University of California Berkeley Professor of Economics Michael Reich joins the Live show alongside Yahoo Finance Reporter Brooke DiPalma to discuss the minimum wage raise in California and its impact on businesses across the nation.

Reich explains that minimum wages are already higher in populous areas of California, making the actual increase in minimum wages closer to 5%. On the other hand, operating costs should only increase by 1.7%, he estimates. Resulting inflationary effects will be minimal, Reich explains: “This is a one-time increase, it’s not going to affect inflation a year or two from now. The price effect will probably work its way through within 3 to 6 months. Yeah, this policy could spread in other areas. We have a very heterogeneous terrain across the states, what the minimum wages are. The minimum wage is already $20. A few pennies shy of $20 in Seattle, and close to that in Denver. But then there are about 20 states where it’s still $7.25. Will this be copied in other states — I think we’ll see how the experiment works. But it’s possible.”

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