PrepTest 151, Section 2, Question 24
Economist: If minimum wage levels are low, employers(65 more words not shown)
Which one of the following,(7 more words not shown)
- AProductivity growth in(11 more words not shown)
- BThe economist's country(15 more words not shown)
- CA country's unemployment(11 more words not shown)
- DThe economist's country(11 more words not shown)
- EProductivity-enhancing new technology(5 more words not shown)
Reading the argument
More productivity sounds good. Does it outweigh the lost hiring?
The incentive story is understandable. Imagine labor costing an employer $5 an hour: hiring another worker might look more attractive than buying an expensive machine. If labor becomes more expensive, investment in technology could become more attractive. The passage gives us the resulting increase in productivity; we can accept that without treating the hypothetical wage as a real-world claim.
What we’re looking for
The conclusion goes further. It says the improvement in overall economic health will outweigh any harm from hiring cutbacks. Productivity is one part of that comparison, and even the author acknowledges a possible cost. To strengthen the argument, I'd want a better connection between the productivity gain and benefits large enough to matter to the economy overall.
Working the answers
- ACorrect
This adds a benefit I hadn't yet counted: productivity growth can lead to more jobs later. The argument acknowledges an initial risk of hiring cutbacks; A gives us a reason those cuts need not be the entire employment story.
That supports the claim that the productivity gain can outweigh the harm. It doesn't prove every lost job will be replaced or that every other effect is favorable. The question asks for added support, and a usual tendency toward eventual job creation makes the proposed benefit more substantial.
- B
The past unemployment trend doesn't tell us what raising the minimum wage will do now. An existing problem could make hiring cutbacks more concerning, but it doesn't show that this policy's productivity gains would outweigh them. We need a comparison of the policy's effects, not just the country's recent history.
- C
This emphasizes why employment matters to living standards, but it doesn't establish a favorable employment effect from the proposed policy. Given the acknowledged hiring cutbacks, it may make that potential cost more concerning. It doesn't provide the missing reason that the productivity benefit outweighs the harm.
- D
Being behind other countries in technology doesn't settle whether this policy would make the country better off overall. The relevant comparison is the country's outcome with the increase versus its outcome without it. International rankings don't tell us how the productivity benefit compares with the hiring cost.
- E
Technology becoming outdated quickly doesn't add support for the claimed net benefit. It might raise questions about how long an investment remains useful or when another purchase will be needed. It doesn't necessarily make the technology worthless, but it gives no reason the productivity gain should outweigh the hiring cutbacks.
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