Imagine Walt is gently rocking in his hammock on a well-deserved day off when his phone rings. I’m his boss. She tells him that her colleague is unable to come to work due to an emergency. Even though time is tight, she asks Walt if he can work today. Otherwise, the store will not be able to open due to lack of staff.
Walt says: “I’m enjoying my vacation more than I expected. And, you know, I’ve been looking forward to this vacation for a month and I don’t really want to take time off. But let me tell you, on that day… If you’ll double my salary, I’ll do it. Let’s put down the lemonade and get to work.” Walt’s employer agreed, saying the profits from opening the store would outweigh Walt’s additional wages. .
I think most of you can relate to Walt and, in fact, sympathize with his situation. There doesn’t seem to be anything wrong with him breaking his vacation and demanding something special to get to work.
Note, however, that Walt is guilty of “price gouging.” After all, wages are just compensation for labor. And here Walt is taking advantage of the labor shortage to raise prices. But he also seems to be making reasonable demands.
First, Walt has the right to demand double pay for working on holidays. This is quarrel:
If Walt has the right not to work at all on holidays, he also has the right to work on holidays for double pay.
Walt has the right not to work at all on his days off.
In other words, Walt has the right to work on his days off for double pay.
What can we say to defend the first premise? From the employer’s perspective, Walt providing expensive labor is no worse, and potentially better, than not providing labor. Please consider this to be true. If she rejects his offer of expensive labor because it is not in her interest, her situation is no worse than if Walt had not offered her any work at all. If she accepts the offer because it is in her interest, she will be better off than if Walt had not offered her the job at all.
Regarding the second premise, I think everyone agrees that Walt has the right not to work at all on his days off. That’s for sure generous But it’s not like the employer (or the government) can force him to come. Therefore, we should conclude that Walt is entitled to “significantly reduce wages.”
Furthermore, allowing Walt to “cheat wages” has positive consequences. If he didn’t have the right to demand double pay, he would have stayed in the hammock. And this outcome would have made both Walt and his employer even worse. It will be worse because Walt won’t get the paycheck he values more than holidays, and Walt’s employer will be worse off because she won’t be able to open the store, but for Walt, it’s It’s more important than double your salary. She would give it to Walt.
If we think these reasons justify Walt’s double wage claim, we should also think that they also justify the more traditional case of “price gouging.” For example, it seems as though it is people’s right not to provide any ice to people at disaster sites (although that may be generous). In other words, the government has no right to force Walt out of his hammock in order to purchase a bag of ice and transport it to the scene. And even if Walt doesn’t provide ice, he might provide expensive ice— it either makes the prospective buyer better off (in which case they buy), or it doesn’t go bad because they can simply reject the offer. Additionally, the opportunity to make an unusually large amount of money may motivate Walt to get out of his hammock and deliver ice to people who need it. We tend to empathize more with “wage hikers” than with “price gougers,” but there are equal reasons to tolerate both.
Christopher Fryman is Professor of General Business in the John Chambers College of Business and Economics at West Virginia University.
