Exercises: Wage differentials and the minimum wage

Explain three reasons why some jobs are better paid than others — qualifications and training, level of responsibility, hardship or danger, scarcity of qualified people — and give a real occupation as an example of each.

On the payslip of his first job, Alex sees: gross salary $\$26\,000$, Social Security contributions $\$1\,700$, income tax (IRPF) withholding $\$1\,800$.

1. a) Calculate the net salary he will receive in his bank account.
2. b) Explain in one sentence what contributions are: what are they paid in exchange for (unemployment, pensions, healthcare)?

The figure shows the average monthly salary in the imaginary country of Laboria according to education level: no qualifications, $\$22\,000$; vocational training or high school (preparatoria), $\$28\,000$. The figure for university graduates is covered, but it is known that they earn on average $50\ \%$ more than the previous group.

1. a) Calculate the average salary of university graduates, which is the missing figure.
2. b) Explain two reasons why salary usually increases with level of education (more training, greater responsibility, fewer people qualified for certain roles).

The statutory minimum wage is the legal floor: no full-time worker can be paid less. In Mexico, it is around $\$23\,680$ gross per month spread over $14$ payments.

1. a) Calculate the annual minimum wage.
2. b) A store offers a full-time job for $\$21\,000$ per month across $12$ payments: calculate the annual total and explain whether the job offer is legal.

In the same town, an industrial electrician with a robotics certificate earns $\$46\,000$ per month, while a shop assistant earns $\$26\,000$.

1. a) Using the factors covered in the unit, explain why the market pays the electrician more (lengthy training and few people holding that certificate).
2. b) Reason what would happen to that salary if there were suddenly many electricians with the same certificate while demand remained the same.

Two full-time job offers: (A) gross salary of $\$32\,000$ with $\$3\,000$ in deductions; (B) gross salary of $\$29\,000$ with $\$1\,400$ in deductions and free canteen meals valued at $\$2\,000$ per month.

1. a) Calculate the monthly net salary for each offer and add the value of the canteen meals to Offer B.
2. b) Which would you choose? Justify your choice using the numbers and at least one non-monetary factor (working hours, commute distance, work environment).

The government plans to raise the Minimum Interprofessional Wage (SMI) by $10\ \%$. Faced with this announcement, two opposing stances emerge: a hospitality business association claims that the measure will cause massive layoffs and drive up prices in the sector, while a trade union argues that the increase will boost aggregate demand and generate net employment because low-income families will spend that money immediately.

1. a) Using the functioning of the labor market and the concept of marginal propensity to consume, analyze the economic mechanisms that support each of the two stances and explain under what real economic conditions each effect would carry more weight.
2. b) Design a monitoring protocol for the Ministry of Labor with two specific economic indicators that make it possible to assess, after six months, whether the increase has had a contractionary or expansionary impact on employment and the price level in the services sector.

A labor audit at a large services company reveals that the average wage of female staff is $14.5\ \%$ lower than that of male staff. However, the Human Resources department demonstrates with payroll records that for every single position, exactly the same base salary is paid to men and women in the same category.

1. a) Resolve the apparent contradiction: explain what structural economic and labor factors (horizontal and vertical segregation, salary bonuses, contract type, and family burdens) explain the existence of this average wage gap without there being a direct violation of equal pay laws for the same position.
2. b) The company plans to allocate its equality budget to offer a voluntary assertiveness and salary negotiation course exclusively for female employees. Critique the effectiveness of this measure and design two organizational labor policies that address the true causes of the gap identified in the previous section.

In a shopping mall, two sales assistants work in the same department and with the same duties:

• Marcos has a full-time contract ($160$ hours per month) and earns a gross monthly salary of $\$1,280$.

• Laura has an involuntary part-time contract ($80$ hours per month) and earns a gross monthly salary of $\$720$.

1. a) Calculate the gross wage per standard hour for each of them and determine whether there is wage discrimination based on the unit price of labor.
2. b) Marcos argues to his colleagues: "I earn almost twice as much as Laura, so the company values my work much more." Refute Marcos's argument using the concepts of hourly pay and working hours, and explain what medium- and long-term economic harm Laura suffers by being on an unwanted part-time schedule (consider saving capacity, Social Security contributions, and future unemployment or retirement benefits).