PrepTest 129, Section 1, Question 8
When companies' profits would otherwise be reduced by(58 more words not shown)
Which one of the following,(24 more words not shown)
- AAfter the recent(31 more words not shown)
- BIf, in any(30 more words not shown)
- CWith respect to(26 more words not shown)
- DA few employees(21 more words not shown)
- ESales of fast(20 more words not shown)
Reading the argument
Paying workers more can put pressure on profits, so I can see why a company might respond by employing fewer people. Yet this wage increase didn't produce job cuts in the fast-food industry. What allowed those employers to keep everyone?
Perhaps a restaurant was already operating with the smallest staff it could use. If a small restaurant has just one worker, firing that person could leave nobody to run it. Or perhaps an employer kept the same number of jobs but reduced hours: a worker could remain employed while going from forty hours a week to thirty-two. Either possibility gives us a way to think about unchanged job numbers.
What we’re looking for
We need a fact that explains the actual outcome. The passage says most fast-food workers earn the minimum wage, so we can't simply assume that the increase left everyone's wages untouched. The useful answer should show how the industry could handle the higher wage without cutting jobs. It needn't use the particular explanation we imagined.
Working the answers
- ACorrect
This offers a different explanation: employees left less often, so employers saved on recruiting replacements. Those savings were enough to cover the wage increase. For example, an extra $100 spent on wages needn't reduce profit if the employer simultaneously saves $100 on recruiting. The pressure that ordinarily prompts job cuts has been offset by lower costs elsewhere.
- B
This tells us what happens if many minimum-wage jobs are eliminated: supervisory jobs will also go. But the event we need to explain is that jobs weren't eliminated. A rule about the consequences of cutbacks doesn't explain why the cutbacks never occurred.
- C
Similarity to other industries doesn't tell us how these employers absorbed the wage increase. Other industries might share the same explanation, but C doesn't supply it. We still need to know why higher wages didn't lead to fewer jobs here.
- D
A few employees already earning above the new minimum doesn't explain what happened to the many workers paid the minimum. Imagine that the managers' pay is unaffected while the register workers and cooks must receive raises. The company still faces the added wage expense for those workers. D leaves that expense, and the absence of job cuts, unexplained.
- E
Increased sales might have provided extra revenue to pay the higher wages. But E says sales to minimum-wage workers did not increase. It therefore doesn't supply that potential offset. We can't explain the unchanged job count with additional revenue that the answer says wasn't generated by this group.
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