127. Small-business groups are lobbying to defeat proposed federal legislation that would

substantially raise the federal minimum wage. This opposition is surprising since the

legislation they oppose would, for the first time, exempt all small businesses from paying any

minimum wage.

Which of the following, if true, would best explain the opposition of small-business groups to

the proposed legislation?

(A) Under the current federal minimum-wage law, most small businesses are required to pay

no less than the minimum wage to their employees.

(B) In order to attract workers, small companies must match the wages offered by their

larger competitors, and these competitors would not be exempt under the proposed

laws.

(C) The exact number of companies that are currently required to pay no less than the

minimum wage but that would be exempt under the proposed laws is unknown.

(D) Some states have set their own minimum wages---in some cases, quite a bit above the

level of the minimum wage mandated by current federal law---for certain key industries.

(E) Service companies make up the majority of small businesses and they generally employ

more employees per dollar of revenues than do retail or manufacturing businesses.

answer: B

hoping someone can explain it for me...why B?

the answer is B b/c: if the minimum wage is raised, let's say from $5 to $6,the big

businesses will have to raise. Even though the small firms don't have to do that, still they

have to raise since they need to compete with the big guys. Therefore, they don't want the

minimum legal wage to be raised.

Does it help?