Economist: The wages of many of the lowest-paid corporate employees in this country would be protected from cuts by ...

Irina on August 17, 2019

@Minerva,

This is a tricky question! Necessary assumption questions generally require us to identify an answer choice that must be true for the argument to make sense.

Let's look at the argument.
The economist argues that the wages of many of the lowest-paid corporate employees would be protected from cuts by enacting a maximum wage law that limits the executive pay in relation to the corporation's lowest-paid employees. Currently, some executives try to increase corporate profits - and their salaries - by cutting the pay and benefits of corporations' employees. A maximum wage law would remove this incentive. The reasoning here is that the executives in this scenario will be reluctant to cut the lowest-paid workers' wages because they would also have to lower the executive compensation.

The question asks which of the following assumptions does the economist's argument require, meaning we are looking for an answer choice that would cause the argument to fall apart if it is false. Let's look at each of the answer choices:

(A) All of the lowest-paid corporate employees in the economist's country are employed at corporations at which the executives ear more than 50 times what the corporations' lowest-paid employees in the economist's country earn.

Incorrect. This fact tells us that the proposed maximum wage law would result in the executives' salaries being lowered but in that scenario, but it is irrelevant that all of the lowest-paid corporate employees work in such companies. The economist's argument says "the wages of MANY of the lowest-paid employees would be protected," not ALL.

(B) Some corporate executives who cut the pay of their corporations' lowest-paid employees in the economist's country in order to increase their own salaries already earn less than 50 times what their corporations' lowest-paid employees in the economist's country earn.

Incorrect. This fact tells us that the maximum wage law will make no difference for SOME companies, but some can be as few as one, meaning the argument that "the wages of MANY" employees would be protected is still valid.

(C) No corporate executives in the economist's country would raise the wages of their corporations' lowest-paid employees in the economist's country unless such a maximum wage law linked executive wages to those of their corporations' lowest-paid employees in the economist's country.

Incorrect. The argument is about wage cuts, not wage raises.

(D) If corporate executives could not increase their own salaries by cutting the pay and benefits of their corporations' lowest-paid employees in the economist's country, they would never change the wages of those employees.

Incorrect. The argument is only concerned with wage cuts, "change" implies cuts or raises.

(E) If such a maximum wage law were enacted in the economist's country, one or more corporate executives would not cut the pay and benefits of their corporations' lowest-paid employees in the economist's country.

Correct. This fact tells us that the law will produce the desired result in at least one or more companies - if this answer choice is false, and no executives would not cut wages, i.e. all executives would still cut wages, then the maximum wage law makes no difference, and the argument conclusion is no longer valid.

Does this make sense?

Let me know if you have any further questions.