Historically, relations between workers and employers in the United States have often been characterized by the employment-at-will doctrine, according...
GMAT Reading Comprehension : (RC) Questions
Historically, relations between workers and employers in the United States have often been characterized by the employment-at-will doctrine, according to which the duration of employment is determined by the employer and the grounds for termination are limited only by the provisions of contracts and specific statutes. Many state courts and legislatures have reevaluated this doctrine and have modified it by expanding the concept of wrongful termination, thereby increasing employer liability. Some economic theorists suggest that such changes tend to reduce employment in states that enact them, because protecting workers against wrongful termination raises the cost of labor to employers: firms will tend to spend more time and money screening potential employees, be reluctant to terminate less-productive workers, and incur greater legal expenses. In a study that took into account differences among states, researchers Dertouzos and Karoly concluded that states with wrongful-termination laws experienced a two percent to five percent drop in their employment rate as a result of adopting these laws. They also found that the impact on employment appears to be smallest in manufacturing, where unions have already institutionalized similar protection, and in small firms, perhaps because those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits against them.
The passage suggests which of the following regarding wrongful-termination lawsuits?
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| "Historically, relations between workers and employers in the United States have often been characterized by the employment-at-will doctrine, according to which the duration of employment is determined by the employer and the grounds for termination are limited only by the provisions of contracts and specific statutes." | What it says: In the US, there's a traditional rule called "employment-at-will" where employers decide how long workers stay and can fire them for almost any reason (except what's forbidden by contracts or laws). What it does: Introduces the foundational concept - sets up the historical context Source/Type: Historical fact Connection to Previous Sentences: This is the opening sentence - establishing the baseline situation Visualization: Think of it like: Employer has 90% control over employment decisions, worker has 10% protection (only through specific contracts/laws) What We Know So Far: Traditional US employment = employer-controlled What We Don't Know Yet: Whether this has changed, what the consequences are |
| "Many state courts and legislatures have reevaluated this doctrine and have modified it by expanding the concept of wrongful termination, thereby increasing employer liability." | What it says: States have been changing this old rule by making it harder for employers to fire workers unfairly, which means employers face more legal risk. What it does: Introduces the change/shift from the historical baseline Source/Type: Factual development/trend Connection to Previous Sentences: This directly builds on Sentence 1 by showing the evolution away from pure employment-at-will. Notice the clear contrast: Sentence 1 = employer control, Sentence 2 = worker protection increasing Visualization: Timeline showing: 1950s = 90% employer control → 2000s = 70% employer control (workers gaining protection) What We Know So Far: Traditional employer control is decreasing, worker protections increasing What We Don't Know Yet: What effects this change has had |
| "Some economic theorists suggest that such changes tend to reduce employment in states that enact them, because protecting workers against wrongful termination raises the cost of labor to employers:" | What it says: Economists think these worker-protection laws actually reduce the number of jobs available because they make hiring workers more expensive for companies. What it does: Introduces the potential negative consequence of the changes described in Sentence 2 Source/Type: Economic theory/expert opinion Connection to Previous Sentences: This builds on Sentence 2 by exploring the potential downside of increased worker protection. Key insight: We're moving from describing what happened to exploring consequences Visualization: State A (strong worker protection) = 1000 jobs available State B (weak worker protection) = 1200 jobs available Reading Strategy Insight: The phrase "Some economic theorists suggest" signals we're getting an expert perspective, not proven fact |
| "firms will tend to spend more time and money screening potential employees, be reluctant to terminate less-productive workers, and incur greater legal expenses." | What it says: This explains WHY costs increase: companies spend more on hiring decisions, keep bad workers longer, and face more lawsuits. What it does: Provides the detailed explanation/evidence for the claim made in the previous sentence Source/Type: Economic reasoning (still part of the theorists' argument) Connection to Previous Sentences: This directly supports the previous sentence by explaining the mechanism. Feel relieved here - this is clarification, not new complexity! The author is helping us understand the "because" from the previous sentence. Visualization: Company costs breakdown: - Hiring process: $2000 per employee (vs $500 before) - Keeping bad workers: $5000 lost productivity - Legal fees: $3000 average per case What We Know So Far: Worker protection laws → higher costs for employers → fewer jobs (according to economists) What We Don't Know Yet: Whether this theory is actually true in practice |
| "In a study that took into account differences among states, researchers Dertouzos and Karoly concluded that states with wrongful-termination laws experienced a two percent to five percent drop in their employment rate as a result of adopting these laws." | What it says: Actual research proved the economists right - states with worker protection laws had 2-5% fewer jobs. What it does: Provides concrete evidence supporting the economic theory from previous sentences Source/Type: Research study/empirical evidence Connection to Previous Sentences: This moves from theory to proof. Sentences 3-4 said "economists think this happens," now Sentence 5 says "researchers proved it does happen." This is confirmation, not contradiction. Visualization: Before wrongful-termination laws: 100,000 jobs After wrongful-termination laws: 95,000-98,000 jobs (2-5% decrease) Reading Strategy Insight: The passage is building a clear, consistent argument: theory → evidence → proof. Each sentence reinforces the central idea. |
| "They also found that the impact on employment appears to be smallest in manufacturing, where unions have already institutionalized similar protection, and in small firms, perhaps because those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits against them." | What it says: The job losses were smallest in two types of companies: union manufacturing (because they already had worker protection) and small businesses (because workers don't bother suing them for less money). What it does: Provides specific exceptions/nuances to the general finding Source/Type: Additional research findings (still Dertouzos and Karoly) Connection to Previous Sentences: This adds detail to Sentence 5's finding. This is NOT contradicting the 2-5% drop - it's explaining where the drop was smaller. The researchers are being thorough by showing variation within their overall conclusion. Visualization: Job impact by sector: - General businesses: 5% drop - Union manufacturing: 1% drop (already had protection) - Small firms: 2% drop (less lawsuit risk) Reading Strategy Insight: Final sentence provides helpful specificity rather than complexity. The core argument remains intact: wrongful-termination laws reduce employment, with some predictable variations. What We Know Now: Complete picture of how worker protection laws affect employment, with both general effects and specific variations |
2. Passage Summary:
Author's Purpose:
To explain how changes in employment law have created an unintended consequence, showing that laws designed to protect workers may actually hurt them by reducing job opportunities.
Summary of Passage Structure:
The author builds their explanation by moving from historical context to modern evidence:
- First, the author explains the traditional employment system in America, where employers had almost complete control over hiring and firing decisions.
- Next, the author describes how states have been changing this system by giving workers more protection against unfair firing.
- Then, the author presents the economic theory that these worker protections actually backfire by making it more expensive for companies to hire people, which should reduce the number of available jobs.
- Finally, the author provides research evidence that proves this theory correct, showing that states with stronger worker protections do indeed have fewer jobs, though the effect varies by industry.
Main Point:
Laws that protect workers from wrongful firing, while well-intentioned, actually reduce employment opportunities because they make hiring workers more costly and risky for employers.
3. Question Analysis:
This question asks what the passage suggests about wrongful-termination lawsuits. We need to identify what the passage implies or directly states about these lawsuits, rather than what it explicitly says about employment laws or employment rates.
Connecting to Our Passage Analysis:
From our passage analysis, the most relevant insight comes from the final sentence, which explains why small firms experience smaller employment impacts: "perhaps because those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits against them." This directly addresses wrongful-termination lawsuits and suggests something important about the motivation behind filing them.
The passage analysis also shows us that:
- The passage builds from theory to empirical evidence
- The final sentence provides specific exceptions and nuances
- The research distinguishes between different types of companies based on lawsuit profitability
Prethinking:
The key insight is in the phrase "makes it less profitable for employees to file wrongful-termination lawsuits." This implies that profitability (financial compensation) is a driving factor in whether employees choose to file these lawsuits. If smaller damages make lawsuits "less profitable," then larger damages would make them "more profitable," suggesting that financial compensation is indeed an important motivation for filing these suits.
Why It's Wrong:
- The passage discusses states that implement wrongful-termination laws, not states that don't implement them
- No information is provided about what happens in states without these laws
- The passage focuses on employment effects, not lawsuit frequency in different legal environments
Common Student Mistakes:
- Assuming the passage covers both sides of the legal spectrum? → Focus only on what the passage actually discusses - states with wrongful-termination laws
- Confusing employment rate changes with lawsuit frequency? → Remember these are different measures with different implications
Why It's Wrong:
- The passage mentions unionized manufacturing has less employment impact, but doesn't compare lawsuit profitability between unionized and non-unionized companies
- The comparison about profitability is between small firms and other firms, not between unionized and non-unionized companies
- Unions are mentioned as already providing protection, not as affecting lawsuit profitability
Common Student Mistakes:
- Mixing up the two exceptions mentioned in the final sentence? → Keep manufacturing/unions separate from small firms/lawsuit profitability
- Assuming similar protection means similar lawsuit patterns? → The passage doesn't make this connection
Why It's Wrong:
- The passage suggests the opposite - that wrongful-termination laws make employers reluctant to terminate less-productive workers
- This implies that keeping unproductive workers (due to lawsuit risk) is seen as the lesser cost
- The economic theory presented suggests lawsuit costs outweigh the benefits of firing unproductive workers
Common Student Mistakes:
- Reversing the cost-benefit relationship described in the passage? → Re-read the explanation of why employers become "reluctant to terminate less-productive workers"
- Confusing what employers prefer with what the passage describes as their actual behavior? → Focus on the described reluctance to fire
Why It's Right:
- The passage directly states that small firms' "lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits"
- This language clearly indicates that potential financial compensation affects the decision to file lawsuits
- The word "profitable" in this context refers to the financial benefit employees expect to gain
Key Evidence: "perhaps because those firms' lesser ability to pay damages makes it less profitable for employees to file wrongful-termination lawsuits against them"
Why It's Wrong:
- The passage doesn't compare settlement amounts under different legal doctrines
- Employment-at-will doctrine is described as the historical baseline, while wrongful-termination laws are the newer development
- No information is provided about settlement sizes under either system
Common Student Mistakes:
- Assuming wrongful-termination laws would lead to smaller settlements? → The passage doesn't provide this comparison
- Confusing the historical progression with a comparison of settlement amounts? → Focus on what the passage actually compares