PrepTest 155, Section 2, Question 24
Economist: The increase in the minimum wage in(66 more words not shown)
Each of the following, if(8 more words not shown)
- AThe cost of(22 more words not shown)
- BMost of the(11 more words not shown)
- CIn many factories(14 more words not shown)
- DThe cost to(20 more words not shown)
- EMost factories that(18 more words not shown)
Reading the argument
Higher pay could mean more spending. But what happens to the employers' costs?
The economist follows one helpful chain: raise wages, give workers more disposable income, get more spending on consumer goods, and prompt factories to hire more workers. I can see the proposed benefit. Someone earning more could buy things they previously couldn't afford, giving a business more demand to meet.
But the wage increase also makes some labor more expensive. Employers might reduce their workforce, cut hours, or automate tasks. Those are possible responses, not a claim that every minimum-wage increase has a particular result. The argument needs to show why the extra hiring it predicts will win out over changes that could reduce employment.
Even the spending story needs care. What if prices rise too? What if factories respond to extra demand without hiring? More money in paychecks doesn't, on its own, settle how many jobs will exist in Country X.
What we’re looking for
This is a weaken-EXCEPT question. Four choices will give us a reason to doubt the predicted decrease in unemployment. We want the choice that doesn't undermine that forecast. Keep each possible break in the economist's chain in view as we compare them.
Working the answers
- A
This weakens the spending step. If the goods cost significantly more, the higher wages won't buy as much extra merchandise as the economist's story suggests. Imagine a burger rising from $5 to $10: more money in your paycheck doesn't necessarily mean you can buy more burgers. Those numbers are an illustration, not the answer's actual price increase. We don't have to prove that prices erase every benefit; a substantial offset makes the predicted demand-driven hiring less secure.
- B
This weakens the link to jobs in Country X. If most consumer goods are made abroad, greater spending may create demand for workers in foreign factories. Country X's consumers could buy more while much of the production response happens elsewhere. The economist needs increased employment at home to support the stated unemployment forecast.
- CCorrect
Many factories already pay most of their workers well above the current minimum. That doesn't contradict the claim that a large segment of the working population will receive more disposable income. Other workers can still get raises and buy more goods. Nor does C show that employers will cut jobs or that factories won't need workers to meet demand. It describes existing wages without exposing a break in the economist's chain. We also aren't told enough about the new minimum to assume that every worker mentioned would be unaffected.
- D
This directly supplies the job-loss concern. Employers will cover the higher wage costs by reducing their workforces. Even if more consumer demand creates some factory jobs, those gains now have to be weighed against layoffs. The economist hasn't established that the overall result will be a quick decrease in unemployment.
- E
Full warehouses give factories a way to meet extra demand without immediately increasing production. They can sell goods already sitting in storage. That weakens the claimed need for additional factory workers, especially the prediction that unemployment will fall quickly. More purchases don't require new jobs if existing stock can satisfy the purchases.
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