SACRAMENTO -- Governor Jerry Brown has approved an increase in the state's minimum wage, signing a bill that will see California workers receive at least $9 an hour next July and $10 an hour by 2016. But how will it affect the economy?
Dr. Sanjay Varshney is Dean of the Buinsness College at Sacramento State says a minimum wage increase, in theory, is a good thing becuase real wages have been under pressure for a long time.
"Slowly by raising the minimum wage, you're giving more money to the people's pockets, so they can actually go an spend more money on consumer goods," Varshney said.
But, he cautions, it's not necessarily all good news.
"There might be an adverese impact because the affordability of small businesses that tend to hire people on an hourly wage," Varshney said.
As to the wage hike's overall benefit, Dr. Varshney says it comes down to whether or not business will be able to absorb a 20 percent to 30 percent increase in labor costs.