In 2010, many unskilled workers in the United States earned the Federal minimum
ID: 1176996 • Letter: I
Question
In 2010, many unskilled workers in the United States earned the Federal minimum wage of $7.25 per hour. By contrast, average earnings in 2010 were about $28.00 per hour, and certain highly skilled professionals, such as doctors and lawyers, earned $140.00 or more per hour.
a. If we assume that wage differences are caused solely by differences in productivity, how many times more productive was the average worker than a worker being paid the Federal minimum wage?
Round your answer to two decimal places.
times more productive than a minimum wage worker
How many times more productive was a $140-per-hour lawyer compared to a worker earning minimum wage?
Round your answer to two decimal places.
times more productive than a minimum wage worker
b. Assume that there are 20 minimum-wage workers in the economy for each $140-per-hour lawyer. Also assume that both lawyers and minimum-wage workers work the same number of hours per week. If everyone works 40 hours per week, how much does a $140-per-hour lawyer earn a week?
$ per week
How much does a minimum-wage worker earn a week?
$ per week
c. Suppose that the government pairs each $140-per-hour lawyer with 20 nearby minimum-wage workers. If the government taxes 25 percent of each lawyer%u2019s income each week and distributes it equally among the 20 minimum wage workers with whom each lawyer is paired, how much will each of those minimum-wage workers receive each week?
$ each week
If we divide by the number of hours worked each week, how much does each minimum-wage worker%u2019s weekly transfer amount to on an hourly basis?
Round your answer to two decimal places.
$ per hour
d. What if instead the government taxed each lawyer 100 percent before dividing the money equally among the 20 minimum-wage workers with whom each lawyer is paired.
How much per week will each minimum-wage worker receive?
$ per week
How much is that on an hourly basis?
$ per hour
Explanation / Answer
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