1000 RC Passage 5 Q#9

[punitkaur]

How many really suffer as a result of labor market problems? This is one of the most critical yet contentious social policy questions. In many ways, our social statistics exaggerate the degree of hardship. Unemployment does not have the same dire consequences today as it did in the 1930's when most of the unemployed were primary breadwinners, when income and earnings were usually much closer to the margin of subsistence, and when there were no countervailing social programs for those failing in the labor market. Increasing affluence, the rise of families with more than one wage earner, the growing predominance of secondary earners among the unemployed, and improved social welfare protection have unquestionably mitigated the consequences of joblessness. Earnings and income data also overstate the dimensions of hardship. Among the millions with hourly earnings at or below the minimum wage level, the overwhelming majority are from multiple-earner, relatively affluent families. Most of those counted by the poverty statistics are elderly or handicapped or have family responsibilities which keep them out of the labor force, so the poverty statistics are by no means an accurate indicator of labor market pathologies.

Yet there are also many ways our social statistics underestimate the degree of labor-market-related hardship. The unemployment counts exclude the millions of fully employed workers whose wages are so low that their families remain in poverty. Low wages and repeated or prolonged unemployment frequently interact to undermine the capacity for self-support. Since the number experiencing joblessness at some time during the year is several times the number unemployed in any month, those who suffer as a result of forced idleness can equal or exceed average annual unemployment, even though only a minority of the jobless in any month really suffer. For every person counted in the monthly unemployment tallies, there is another working part-time because of the inability to find full-time work, or else outside the labor force but wanting a job. Finally, income transfers in our country have always focused on the elderly, disabled, and dependent, neglecting the needs of the working poor, so that the dramatic expansion of cash and in-kind transfers does not necessarily mean that those failing in the labor market are adequately protected.

As a result of such contradictory evidence, it is uncertain whether those suffering seriously as a result of labor market problems number in the hundreds of thousands or the tens of millions, and, hence, whether high levels of joblessness can be tolerated or must be countered by job creation and economic stimulus. There is only one area of agreement in this debate-that the existing poverty, employment, and earnings statistics are inadequate for one their primary applications, measuring the consequences of labor market problems.

Which of the following, if true, is the best criticism of the author's argument concerning why poverty statistics cannot properly be used to show the effects of problems in the labor market?
(A) A short-term increase in the number of those in poverty can indicate a shortage of jobs because the basic number of those unable to accept employment remains approximately constant.
(B) For those who are in poverty as a result of joblessness, there are social programs available that provide a minimum standard of living.
(C) Poverty statistics do not consistently agree with earnings statistics, when each is taken as a measure of hardship resulting from unemployment.
(D) The elderly and handicapped categories include many who previously were employed in the labor market.
(E) Since the labor market is global in nature, poor workers in one country are competing with poor workers in another with respect to the level of wages and the existence of jobs

OA is A. My answer was C.

Can someone please explain?

Thanks

[vijay_venky]

The reason that the author cites for the disqualification of poverty statistics as a means of measuring labor market problems is that the category consists of many people who are not necessarily affected by labor market(joblessness).

"Most of those counted by the poverty statistics are elderly or handicapped or have family responsibilities which keep them out of the labor force, so the poverty statistics are by no means an accurate indicator of labor market pathologies. "

Now If we have to counter author's argument, we have to prove either that the poverty statistics consists of people who represent labor market (joblessness) as well or that though most of them are unrepresentative, the representative few could be used as a means for measurement.

And A does that the best by saying that "the number of unrepresentative sample is constant and that is the reason why the fluctuations could be attributed to labor market. Remember that we should take whatever is given in the argument to be true.

Now with C the problem is that if Poverty Statistics do not agree with the earning statistics to measure the same thing (effect of unemployment), the poverty stats are not a representative sample (if the earning stats provide the exact information). This is the stand taken by the author himself. But nothing has been mentioned about earning statistics in the passage or in the option. So we cannot comment on this.