Final answer:
The tipping system contributes to wage inequality because it can lead to unpredictable and disparate incomes among employees. Efficiency wage theory suggests that higher pay encourages productivity and loyalty, reducing turnover costs. The impact of minimum wage changes is complex, with benefits for some potentially offset by job losses for others.
The correct option is B.
Step-by-step explanation:
The tipping system is a topic often discussed in the context of wage inequality and labor economics. The student asked which statement best describes the impact of the tipping system on workers' pay.
The correct answer to this question is B) Contributes to wage inequality. This is because the reliance on tips can lead to unpredictable income and reinforce existing pay disparities between workers.
Efficiency wage theory supports the idea that employee pay affects productivity and therefore, some employers may pay above market rate to motivate workers and reduce turnover, as it is less costly in the long run compared to frequently hiring and training new staff.
However, when discussing the minimum wage and potential increases, it is essential to consider both the positive and negative impacts.
A 10% increase for the majority may seem beneficial, but the scenario of 2% losing their jobs underscores the complexity, especially when considering the different circumstances of those affected.
The correct option is B.