December 13, 2005
Shouldn't This Be "Wage Gouging"?

From the New Orleans Times Picayune (scroll down):

A cutthroat, post-hurricane labor market has sent wages skyrocketing in the fast-food industry and prompted some of the New Orleans region's biggest chains to offer workers thousands of dollars in signing bonuses, perks typically associated with higher-paying white-collar jobs.

Burger King recruiters have been visiting federal disaster recovery centers and newly reopened high schools offering a $6,000 bonus, paid in monthly installments, to anyone promising to work full-time at a metropolitan New Orleans restaurant for at least a year. New part-time workers are being offered $3,000 bonuses.

Popeyes Chicken & Biscuits has increased hourly pay for cashiers and cooks from just over the federal minimum wage of $5.15 to more than $8, a jump of more than 50 percent.

"I've been in the (fast-food restaurant) business for 30 years, and I've never seen anything like this," said Glen Helton, president and chief operating officer of Strategic Restaurant Acquisition Corp., the California company that owns the 54 Burger King stores in metropolitan New Orleans.

Strategic Restaurant has reopened about half of its stores and is ready to open 13 more, but it can't until it hires about 500 more workers, Helton said.

Almost overnight, Hurricane Katrina transformed the bottom reaches of the region's economy from an employer's market where low-wage earners had few options for advancement to a worker's market where job opportunities, and higher pay, abound.

A natural disaster has caused suppliers of labor to charge more for an hour of work than they did before the disaster. If this were gas--or even the Burger King that is hiring the now more expensive workers--there would be howls of "price gouging." If charging $5 for a gallon of gas is "unbridled greed" then isn't demanding a $6,000 signing bonus? That many people view these scenarios differently indicates the real issue here is anti-capitalist animus.

Posted by E. Frank Stephenson at 09:41 AM in Economics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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