Logical Reasoning

PT155 · S2 · Q24 Economist: The increase in

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Economist: The increase in the minimum wage in Country X will quickly lead to a decrease in Country X’s rate of unemployment.

Conclusion

The increase in the minimum wage will lead to a decrease in unemployment.

Evidence

As people make more, they will spend more on consumer goods, which will lead to an increase in factory jobs to increase production.

Evaluate

How could we argue that an increase in the minimum wage will not lead to a decrease in unemployment?

- The first thing that probably comes to mind is that raising the minimum wage raises the overhead costs for businesses that depend on minimum wage employees. They might not be able to handle this uptick in wage expense, and they might have to lay people off, which would increase unemployment.

We should otherwise take each step in the author's causal chain and see if we can push back.

- Will higher min wage lead to more purchases of consumer goods? Maybe not. Maybe the people who start making more money still won't have enough to buy more stuff. Maybe they'll just pay off debts or bills.

- Let's say there were more consumer goods purchased. Will that really lead to the hiring of more people to fill needed factory jobs? Maybe not. Maybe those factories are highly automated so if anything it would just mean more robots.

Goal

We need to eliminate four answers that weaken. They will probably either take issue with the predicted implications the author mentioned concerning an increased minimum wage, or they will just offer a new reason why higher minimum wage could increase unemployment (or not reduce it).

24.

Each of the following, if true, would weaken the economist's argument except:

The cost of a minimum-wage
Weakens
This hurts the connection between higher minimum wage and more purchases of consumer goods. Perhaps the people with higher wages will be eager to spend their extra money, but if the prices of consumer goods go up in general, that will have the effect of decreasing spending on consumer goods.
11% picked this
Most of the consumer goods
Weakens
This weakens the connection between higher spending on consumer goods and more domestic jobs being created. Yes, spending on goods will line the pockets of the manufacturers of these goods, but if they're in other countries mostly, then the new jobs created will be in other countries and won't help to reduce the unemployment in Country X.
8% picked this
Correct
In many factories in Country
Why this is right
This has no impact. Someone might think we can weaken the argument by saying, "since most workers make much more than minimum wage, they won't be affected by an increase in the minimum wage, so that weakens the idea that it will quickly lead to a decrease in unemployment." But this answer is very limited in scope, since it applies to many factories. It's saying that in at least five factories a majority of the workers make well above the current minimum wage. Okay, does that hurt any part of the story the author is trying to tell? Was she thinking that factory workers were paid at or near the current minimum wage? No, she's was saying "anyone who DOES make the current minimum wage will have more disposable income when the min wage increase happens, and that extra spending and consumer demand will lead to the creation of factory jobs (that might get paid at any rate, doesn't matter)." This answer is just kind of a word salad, because in the story the author is telling, the people who make minimum wage are responsible for driving up consumer demand, and the decrease in unemployment will come from the labor demand that creates for factory jobs. But whether factory jobs involve minimum wage is irrelevant.
Skill tested: Weaken · how this choice captures the argument's function is the move to repeat next time.
60% picked this
The cost to employers of
Weakens
This gets at our common sense objection that if we raise minimum wage, some employers won't be able to afford all their employees anymore, so they will lay some off, thereby increasing unemployment.
9% picked this
Most factories that produce consumer
Weakens
This attacks the connection between "more consumer goods purchased" and "factories will need to hire more people to make more goods". It's saying, "Nah, they're good with goods. They've got a large surplus just sitting in a warehouse from years of overproduction."
12% picked this

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