Question

In 2018, many unskilled workers in the United States earned the federal minimum wage of $7.25 per hour. By contrast, average earnings in 2018 were about $27 per hour, and certain highly skilled professionals, such as doctors and lawyers, earned $100 or more per hour.

Instructions: In part a, round your answers to 2 decimal places. For all other parts, enter your answers as a whole number unless otherwise indicated.

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?

How many times more productive was a $100-per-hour lawyer compared to a worker earning minimum wage?

b. Assume that there are 20 minimum-wage workers in the economy for each $100-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 $100-per-hour lawyer earn in a week?

How much does a minimum-wage worker earn a week?

c. Suppose that the government pairs each $100-per-hour lawyer with 20 nearby minimum-wage workers. If the government taxes 25 percent of each lawyer’s income each week and distributes it equally among the 20 minimum-wage workers with whom each lawyer is paired, how much more will each of those minimum-wage workers receive each week?

If we divide by the number of hours worked each week, how much does each minimum-wage worker’s weekly transfer amount to on an hourly basis? Instructions: Round your answer to 2 decimal places.

d. Suppose the government taxes 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?

How much is that on an hourly basis?

Answer 1

a) Comparison between average earnings and minimum wage:

It is given that minimum wage per hour is $7.25. Average wage per hour is $27. Thus, the number of times of average earning to the minimum wage can be calculated as follows.

Number of time of average income to the minimum wage = Average earning per hour / Minimum wage per hour

= 27/7.25

= 3.72

Hence, the number of time of average earnings to the minimum wage is 3.72

Comparison between the wage of $100 per hour and minimum wage:

It is given that minimum wage per hour is $7.25. Average wage per hour is $100. Thus, the number of times of earning $100 per hour to the minimum wage can be calculated as follows.

Hence, the number of time of $100 earnings per hour to the minimum wage is 13.79

b) Weekly earnings of lawyer earning $100 per hour:

It is given that minimum wage per hour is $100. Number of hours worked per week is 40.

Thus, the weekly earnings of lawyer can be calculated as follows.

Hence, the weekly earnings of lawyer is $4000

Weekly earnings of minimum wage worker:

It is given that minimum wage per hour is $7.25. Number of hours worked per week is 40.

Thus, the weekly earnings of minimum wage worker can be calculated as follows.

Hence, the weekly earnings of minimum wage worker is $290

c) Each minimum wage worker share from the tax revenue per week:

It is given that the lawyer's wage per hour is $100. Number of hours worked per week is 40. Tax rate is 25%. Number of minimum wage worker is 20 persons. Thus, the minimum wage worker's share in the tax revenue per week can be calculated as follows.

Hence, each minimum wage worker share of tax revenue per week is $50

Each minimum wage worker share from the tax revenue per hour:

It is given that the lawyer's wage per hour is $100. Tax rate is 25%. Number of minimum wage worker is 20 persons. Thus, the minimum wage worker's share in the tax revenue per week can be calculated as follows.

Hence, each minimum wage worker share of tax revenue per hour is $1.25

d) Each minimum wage worker share from the tax revenue per week:

It is given that the lawyer's wage per hour is $100. Number of hours worked per week is 40. Tax rate is 100%. Number of minimum wage worker is 20 persons. Thus, the minimum wage worker's share in the tax revenue per week can be calculated as follows.

Hence, each minimum wage worker share of tax revenue per week is $200

Each minimum wage worker share from the tax revenue per hour:

It is given that the lawyer's wage per hour is $100. Tax rate is 100%. Number of minimum wage worker is 20 persons. Thus, the minimum wage worker's share in the tax revenue per week can be calculated as follows.

Hence, each minimum wage worker share of tax revenue per hour is $5