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# Economist: As should be obvious, raising the minimum wage significantl

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Re: Economist: As should be obvious, raising the minimum wage significantl [#permalink]
A seems like a win-win for companies. They can avoid the costs of increased wages and their profits won't take a hit.

Economist: As should be obvious, raising the minimum wage significantly would make it more expensive for businesses to pay workers for minimum-wage jobs. Therefore, businesses could not afford to continue to employ as many workers for such jobs. So raising the minimum wage significantly will cause an increase in unemployment.

Which one of the following, if true, most weakens the economist’s argument?

(A) Businesses typically pass the cost of increased wages on to consumers without adversely affecting profits. CORRECT
(B) When the difference between minimum wage and a skilled worker’s wage is small, a greater percentage of a business’s employees will be skilled workers. X
OK, but this doesn't attack the argument in any way. It just tells us more of a company's employees will be skilled workers, but the economist argument still stands.
(C) A modest increase in unemployment is acceptable because the current minimum wage is not a livable wage. X
Goes in the wrong direction. This strengthens.
(D) Most workers are earning more than the current minimum wage. X
OK, but this is trying to say that the increase in minimum wage won't matter because most people are being paid above that. Not good enough.
(E) The unemployment rate has been declining steadily in recent years. X
Past is not indicative of the future...OUT
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Re: Economist: As should be obvious, raising the minimum wage significantl [#permalink]
Nairspecht wrote:
I was confused between A/D and chose D since it was more a fact and A was an assumption statement.
D says, most workers are earning more than the current minimum wage. Doesn't that imply that businesses are already employing such workers without a increase in unemployment?

A says "typically businesses pass on the". So there's a probability it won't.

Could someone help me understand?

Hi Nairspecht, here are my two cents, I was also torn b/w A and D but eliminated D for the following reason. The argument says that increasing the minimum wage will increase the unemployment rate as employers wouldn't be able to support the employees with the increased wages.

The keyword with option D is Most ii says "Most workers are earning more than the current minimum wage", but there are still workers who earn min. wage, now if we increase the min. wage the cost to employers for the employees working at minimum wage would increase and they might not be able to support this increased costs, which could still lead to the rise unemployment rate, hence if anything D can be a weak strengthener to the argument.

I hope that helps.
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Re: Economist: As should be obvious, raising the minimum wage significantl [#permalink]
RohitSaluja wrote:
Nairspecht wrote:
I was confused between A/D and chose D since it was more a fact and A was an assumption statement.
D says, most workers are earning more than the current minimum wage. Doesn't that imply that businesses are already employing such workers without a increase in unemployment?

A says "typically businesses pass on the". So there's a probability it won't.

Could someone help me understand?

Hi Nairspecht, here are my two cents, I was also torn b/w A and D but eliminated D for the following reason. The argument says that increasing the minimum wage will increase the unemployment rate as employers wouldn't be able to support the employees with the increased wages.

The keyword with option D is Most ii says "Most workers are earning more than the current minimum wage", but there are still workers who earn min. wage, now if we increase the min. wage the cost to employers for the employees working at minimum wage would increase and they might not be able to support this increased costs, which could still lead to the rise unemployment rate, hence if anything D can be a weak strengthener to the argument.

I hope that helps.

I completely agree with what RohitSaluja said. Another problem with D is that we don't know what will happen when the minimum wage is raised. Will it be raised to an amount that is more than the mentioned workers earn? Let's say the current minimum wage is \$100 per month and most workers earn \$150 per month. If the proposed minimum wage is \$200 per month, this is would be a problem. Even for the mentioned workers, it's hard to conclude what would happen.
Re: Economist: As should be obvious, raising the minimum wage significantl [#permalink]
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