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CAT RC Practice Set-4

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.

Question: Which of the following is the principal topic of the passage?

  1. What causes labor market pathologies that result in suffering
  2. Why income measures are imprecise in measuring degrees of poverty
  3. Which of the currently used statistical procedures are the best for estimating the incidence of hardship that is due to unemployment
  4. Where the areas of agreement are among poverty, employment, and earnings figures
  5. How social statistics give an unclear picture of the degree of hardship caused by low wages and insufficient employment opportunities
Option: 5

Question: The author uses “labor market problems” in to refer to which of the following?

  1. The overall causes of poverty
  2. Deficiencies in the training of the work force
  3. Trade relationships among producers of goods
  4. Shortages of jobs providing adequate income
  5. Strikes and inadequate supplies of labor
Option: 4

Question: The author contrasts the 1930’s with the present in order to show that

  1. more people were unemployed in the 1930’s
  2. unemployment now has less severe effects
  3. social programs are more needed now
  4. there now is a greater proportion of elderly and handicapped people among those in poverty
  5. poverty has increased since the 1930’s
Option: 2

Question: Which of the following proposals best responds to the issues raised by the author?

  1. Innovative programs using multiple approaches should be set up to reduce the level of unemployment.
  2. A compromise should be found between the positions of those who view joblessness as an evil greater than economic control and those who hold the opposite view.
  3. New statistical indices should be developed to measure the degree to which unemployment and inadequately paid employment cause suffering.
  4. Consideration should be given to the ways in which statistics can act as partial causes of the phenomena that they purport to measure.
  5. The labor force should be restructured so that it corresponds to the range of job vacancies.
Option: 3

Question: The author’s purpose in citing those who are repeatedly unemployed during a twelve-month period is most probably to show that

  1. there are several factors that cause the payment of low wages to some members of the labor force
  2. unemployment statistics can underestimate the hardship resulting from joblessness
  3. recurrent inadequacies in the labor market can exist and can cause hardships for individual workers
  4. a majority of those who are jobless at any one time to not suffer severe hardship
  5. there are fewer individuals who are without jobs at some time during a year than would be expected on the basis of monthly unemployment figures
Option: 2

Question: The author states that the mitigating effect of social programs involving income transfers on the income level of low-income people is often not felt by

  1. the employed poor
  2. dependent children in single-earner families
  3. workers who become disabled
  4. retired workers
  5. full-time workers who become unemployed
Option: 1

Question: According to the passage, one factor that causes unemployment and earnings figures to overpredict the amount of economic hardship is the

  1. recurrence of periods of unemployment for a group of low-wage workers
  2. possibility that earnings may be received from more than one job per worker
  3. fact that unemployment counts do not include those who work for low wages and remain poor
  4. establishment of a system of record-keeping that makes it possible to compile poverty statistics
  5. prevalence, among low-wage workers and the unemployed, of members of families in which others are employed
Option: 5

Question: The conclusion stated in lines 33-39 about the number of people who suffer as a result of forced idleness depends primarily on the point that

  1. in times of high unemployment, there are some people who do not remain unemployed for long
  2. the capacity for self-support depends on receiving moderate-to-high wages
  3. those in forced idleness include, besides the unemployed, both underemployed part-time workers and those not actively seeking work
  4. at different times during the year, different people are unemployed
  5. many of those who are affected by unemployment are dependents of unemployed workers
Option: 4

Question: 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?

  1. 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.
  2. For those who are in poverty as a result of joblessness, there are social programs available that provide a minimum standard of living.
  3. Poverty statistics do not consistently agree with earnings statistics, when each is taken as a measure of hardship resulting from unemployment.
  4. The elderly and handicapped categories include many who previously were employed in the labor market.
  5. 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.
Option: 1

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