The garment industry is labor-intensive; the production of garments re

Question

The garment industry is labor-intensive; the production of garments requires the employment of a relatively large number of people. The auto industry is capital-intensive; a large amount of money is invested in elaborate equipment run by a relatively small number of people. If fringe benefits are not considered, a typical United States garment worker in 1979 earned 46 percent of a typical auto worker's wages.

Which of the following, if true, is likely to be among the factors that account for the disparity between auto workers' and garment workers' wages?

(A) There is generally less variation among the wages of garment industry workers than among those of auto industry workers.
(B) Wage increases in the auto industry have a smaller effect on manufacturers' total costs than do wage increases in the garment industry.
(C) The fringe benefits that automakers provide for their employees are more comprehensive than are those provided for garment workers.
(D) The auto industry faces more competition from companies outside the United States paying low wages than does the garment industry.
(E) The auto industry employs a larger total number of workers than does the garment industry.

nandeta · Answer

The garment industry is labor-intensive; the production of garments requires the employment of a relatively large number of people. The auto industry is capital-intensive; a large amount of money is invested in elaborate equipment run by a relatively small number of people. If fringe benefits are not considered, a typical United States garment worker in 1979 earned 46 percent of a typical auto worker's wages.

Which of the following, if true, is likely to be among the factors that account for the disparity between auto workers' and garment workers' wages?

(A) There is generally less variation among the wages of garment industry workers than among those of auto industry workers. 
Wrong. The questions stem is asking for a reason and not a conclusion.

(B) Wage increases in the auto industry have a smaller effect on manufacturers' total costs than do wage increases in the garment industry.  
Correct. This can be one of the reason .

(C) The fringe benefits that automakers provide for their employees are more comprehensive than are those provided for garment workers. 
Wrong. The fringe benefits is not the reason for the wage disparity. If this is true, then clothing labor should be getting more wage if they are not getting fringe benifits.

(D) The auto industry faces more competition from companies outside the United States paying low wages than does the garment industry. 
Wrong. If this is true, then they should lower the wages of auto-makers if they are facing competition.

(E) The auto industry employs a larger total number of workers than does the garment industry. 
Wrong. This is going against the facts stated in premise.

NischalP · Answer

GMATNinja

Could you help explain why D could not be a possible reason for disparity?

GMATNinja · Answer

The wage disparity in the passage is that "if fringe benefits are not considered, a typical United States garment worker in 1979 earned 46 percent of a typical auto worker's wages."

So, the correct answer will help  explain why auto workers earn so much more than garment workers .

Here's (D):
 
This answer choice tells us that auto companies face MORE foreign competition than do garment companies. In addition, these international auto companies pay low wages to their workers.

This could actually incentivize American auto companies to pay their workers  lower  wages in order to drive down costs and compete with foreign auto companies. Garment companies, meanwhile, were not facing as much foreign competition, and therefore would not have been under pressure to lower wages.

This doesn't explain why auto workers' wages were so much  higher  than garment workers' wages, so (D) is out.

I hope that helps!

VerbalBot · Answer

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The garment industry is labor-intensive; the production of garments re

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