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Atticus Finch
Atticus Finch
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Q24 - Economist: If minimum wage levels are low, employers

by ohthatpatrick Sat Nov 03, 2018 1:36 pm

Question Type:

Stimulus Breakdown:
Conclusion: Raising min wage would help economy more than resulting hiring cutbacks would harm it.
Evidence: Higher min wages result in companies' buying productivity-enhancing technology, leading to higher productivity, leading potentially to higher average living standards.

Answer Anticipation:
It's helpful to think through possible Objections, even on Strengthen, so how might we argue that raising the min wage would NOT be net gain for the economy?

We could object that employers will lay people off, invest in robots, and though productivity will go up, higher average living standards will not since tons of people will be laid off or unable to get a job at the new min wage.

So we could strengthen by learning the opposite: this won't cause employers to lay employees off ... the remaining pool of employees will be big enough that average living standards DO go up. Or the answer could just give us a new fact about higher minimum wages that sounds like a net positive for the economy.

Correct Answer:

Answer Choice Analysis:
(A) YES, this somewhat helps, since adopting a higher min wage is supposedly going to lead to more productivity. If that leads to job creation it's a benefit to our economic health (and offsets the job loss the higher wages may have caused).

(B) I don't care much about the history of the economy. We're trying to judge a prediction. But if the jobless rate has been rising, it sounds like further joblessness could be troubling, so maybe this weakens?

(C) This might serve more to weaken, since it's talking about the potential downside of raising the min wage (unemployment) and making that downside sound vital to economic health.

(D) Comparing this economy to others is meaningless, unless we're citing other examples where countries raised the min wage and did / didn't see an improvement to their economy.

(E) This sounds like it almost weakens, since productivity-enhancing new tech was one of the upsides of raising the min wage. This answer makes that upside sound more minimal and fleeting

Takeaway/Pattern: I wasn't in love with (A) on a first pass, but I kept it in since it took something that was going to be a supposed result of raising the min wage and attached it to some idea that sounded like a gain to economic health. The main challenge here for students is seeing "productivity growth" as a codeword for "raising minimum wage levels".

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Vinny Gambini
Vinny Gambini
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Re: Q24 - Economist: If minimum wage levels are low, employers

by SanaM134 Mon Nov 05, 2018 1:05 pm

Hi! Thank you for the explanation.

I was wondering if you could comment on the method of reasoning that I used to get to answer choice A. To me, it seemed that there was a gap between going from productivity growth and the country's overall economic health. I know that generally one can assume that productivity growth is beneficial to the economy and its health, but it seemed like a significant term shift/leap that needed to be addressed. That is why, going into the answer choices, I was looking for an answer that lessened or closed the gap between a growth in productivity to actual benefits to the economy, which I found in answer choice A with its mention of productivity growth leading to job creation.

Does this seem like a valid reasoning method? Do you think that there was a significant gap/leap between productivity growth and overall economic health to justify my reasoning?

Thank you again!