PrepTest 129, Section 3, Question 6
Economist: As should be obvious, raising the minimum(42 more words not shown)
Which one of the following,(7 more words not shown)
- ABusinesses typically pass(12 more words not shown)
- BWhen the difference(21 more words not shown)
- CA modest increase(14 more words not shown)
- DMost workers are(7 more words not shown)
- EThe unemployment rate(7 more words not shown)
Reading the argument
Paying a worker $15 an hour costs more than paying that worker $8. That much is straightforward. But why does a higher cost mean the business cannot afford the same number of workers?
Perhaps the business has enough money to absorb the increase. A business with substantial reserves might pay more without cutting jobs. And even if some businesses cut positions, what if the displaced workers find other available jobs? Losing one particular job does not necessarily mean remaining unemployed.
I'd also want to know how many workers the new minimum actually affects. If everyone already earned more than the proposed minimum, increasing it would not require those employers to raise anyone's pay. The argument needs the change to affect wages and needs that effect to translate into unemployment.
What we’re looking for
For the weakening question, we can challenge either of those links. I'd look for evidence that businesses can keep their workers, that displaced workers can find other work, or that the wage increase does not affect the workers in the first place.
Working the answers
- ACorrect
This supplies another way for businesses to cover the higher wages: charge customers more. If those price increases preserve profits, higher wages need not make it unaffordable to keep the workers. The economist treats the additional wage expense as if there were no way to offset it; A gives a typical way businesses do so.
- B
We are not told that the gap between minimum wages and skilled workers' wages is small, so we do not know whether this condition applies. Even if it did, a greater percentage of skilled workers would not show that total employment stays the same. It could accompany a reduction in positions for other workers.
- C
Acceptable and likely to happen are different questions. C offers a reason someone might tolerate an increase in unemployment. It does not cast doubt on whether the wage increase will cause it. The economist's conclusion is a prediction, not a judgment about whether the policy is worth its costs.
- D
This resembles the thought that few workers would be affected, but “most” leaves room for many workers earning the current minimum. Some of them could lose their jobs, increasing unemployment. Also, earning more than the current minimum does not guarantee earning more than the new, higher minimum. D does not establish that the change leaves employment unaffected.
- E
A declining unemployment rate in recent years does not tell us the effect of this proposed policy. The rate could have been falling and then rise because of a new change. We need evidence about the economist's predicted causal effect, not just the direction of the past trend.
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