Logical Reasoning

PT151 · S2 · Q24 Economist: If minimum wage levels

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Economist: If minimum wage levels are low, employers have a greater incentive to hire more workers than to buy productivity-enhancing new technology.

Conclusion

Raising our min wage levels would improve overall economic health more than the hiring cutbacks that could result from raising it.

Evidence

When min wage levels are low (like now), employers would rather hire more people than buy expensive technology that would improve productivity. By hiring workers (who are less productive than that fancy new tech), productivity falls off, and productivity is connected to higher average living standards. Meanwhile, high min wage levels results in higher productivity.

Evaluation

Since this is a Comparison between a world in which we have low min wage vs. higher min wage, we are interested in everything that relates to overall economic health in each of those two worlds.

The author needs there to be more to gain than there is to lose, when we raise the min wage. The current tradeoffs we know about are that with a higher min wage, we would have higher productivity but possibly some people would lose their jobs.

Goal

We want an answer to tell us that .

Or we want any other factor we haven't talked about yet that gets better in a world with higher minimum wage levels (a factor that relates to better overall economic health)

24.

Which one of the following, if true, most strengthens the economist's argument?

  1. Correct

    Productivity growth in a country

    Why this is right

    Cool, we're learning about a good thing that would happen in a world with higher min wage. We were told that higher min wage leads to better productivity growth, and this answer adds on that better productivity growth will usually lead to more job creation. This makes us feel better about "the good outweighs the bad", since the bad was "some people will lose their jobs". This is saying, "Yes, initially ... but ultimately this move will create jobs, so we'll eventually get the boost without much or any of the detriment".

    Skill tested: Strengthen · how this choice captures the argument's function is the move to repeat next time.

    75% picked this

  2. The economist’s country has seen

    Opposite

    This doesn't do much, because it's not pointing us to any comparative difference between a world in which we do / don't have a low minimum wage. But since it's saying that unemployment has already been rising for a decade, it sort of makes the detriment of raising the min wage (job losses) sound worse than before, because we'd be adding more job losses to an economy that has already seen growing unemployment for 10 years.

    3% picked this

  3. A country’s unemployment rate is

    Opposite

    If anything this feels like it goes against our author saying that "average living standards track closely to productivity levels". And it feels like if we raised our min wage, which would probably trigger layoffs, we would be increasing our unemployment rate, thereby lowering our average living standards.

    11% picked this

  4. The economist’s country currently lags

    Out of Scope Comparison

    It isn't relevant to this conclusion how this country compares to other countries. It's only relevant whether raising the min wage would make this country's new overall economic health comparatively better than this country's previous overall economic health.

    6% picked this

  5. Productivity-enhancing new technology tends to

    Opposite

    The author is telling a story in which we raise the min wage, which then incentivizes companies to pursue productivity-enhancing technology. If that technology quickly becomes outdated, it sounds like our author's suggestion is nudging companies towards making an investment with a very short shelf life.

    5% picked this

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