Self-study
Economist: Support If minimum wage levels are low, employers have a greater incentive to hire more workers than to buy productivity-enhancing new technology. ██ █ ███████ ████████████ ███████ █████ ██ █████████ ███ ██████ ███████ ██████ ██████████ █████ ████ ███████████ ████ ███████ ████ ██████ ██████ ██ ██████ █████████████ █████ ███████ ███ █████████ ███ ███████ ████ ██████ █████ ███████ ███ █████████ ███████ ████████ ██████ ████ ████ ███ ██████ ████████ █████████ ██ ███ █████ █████ ████ ███
Summarize Argument
The economist concludes raising the minimum wage would provide a net benefit to the economy, despite possibly increasing unemployment. Why? Because it would result in higher productivity, and the current low minimum wage incentivizes businesses to hire more workers rather than invest in technology that would improve productivity and allow for higher living standards.
Notable Assumptions
The economist assumes raising the minimum wage would not cause large enough hiring cutbacks to outweigh the benefits of productivity growth. This means assuming the country’s overall economic health depends at least partly on productivity growth.
24.
Which one of the following, ██ █████ ████ ███████████ ███ ███████████ █████████
a
Productivity growth in █ ███████ ███████ █████ ██ ██ ████████ ████████ ██ ███ █████████
This implies the main downside to a minimum wage increase—job losses—will be only temporary, thus strengthening the economist’s case for a higher minimum wage.
b
The economist's country ███ ████ █ ████ ███ ██████ ████████ ██ ███ ████████████ ████ ████ ███ ████ ███████
This is irrelevant. It doesn’t imply the increase would still be slow if the minimum wage were raised.
c
A country's unemployment ████ ██ █ ███ ██████ ██ ███████████ ███ ███████ ██████ ██████████
This weakens the economist’s argument. It suggests extra unemployment caused by a minimum wage increase could cancel out the benefit to average living standards caused by increased productivity.
d
The economist's country █████████ ████ ██████ █████ █████████ ██ ███ ███████████ ██ ███ ███████████
This is irrelevant. It doesn’t say that a higher minimum wage would cause an especially large investment in new technology, nor that such technology would cause an especially large productivity increase.
e
Productivity-enhancing new technology █████ ██ ███████ ██████ █████████
If anything, this weakens the economist’s argument. It implies the primary benefit of raising the minimum wage—greater productivity because of more investment in technology—would be short-lived.