Bastiat’s Bastions

You'd think in the three months I'd be able to come up with a more clever title…

Two interesting articles about the labor market in New Orleans with seemingly contradictory statements. One says the going wage for unskilled workers is more than $10/hour, the other says are plenty of folks who will work betwen $6/hour and $8/hour.

First, from NOLA.com, the plight of NOLA firefighters. It seems to me that firefighters have three basic complaints.

(1) They were not included in the group of city employees that received across the board raises. Notably, police officers were included.

(2) There are fewer firefighters than there were pre-Katrina and they are having difficulty attracting new firefighters.

(3) The salary being offerred to attract new firefighters is higher than the salary being earned by many firefighters that have been on the job for some time.

This situation where the salary of inexperienced workers exceeds the salaries of experienced workers is called "salary inversion" and can be a very sticky situation for firms. It happens at places, for instance, like Nicholls State University. As the article notes, fast food restaurants are offerring wages of $10/hour. If the city is to attract new firefighters, they will have to pay competitive wages. This means new hires would be earning more than experienced workers. It seems then, that solving item (2) causes item (3), while item (1) isn't possible with the budget.

Is salary inverstion equitable? What should the city do? The firefighters? Does your opinion change depending on whether or not you are the new hire?

One last thing about the fire fighters…I'm not sure about Parent's math, it would seems firefighters are not very healthy these days…

"Because of resignations and retirements, it now has 695 employees, including 651 actual firefighters, but about 100 are out on sick leave on a typical day, meaning "manpower is down between 30 and 60 members on a daily basis," Parent said.

On to the second article. The Soutern Poverty Law Center is suing Decatur Hotels on behalf of a group of immigrant hotel workers. Without getting into the details of this lawsuit (the complaint is on the SPLC's website), a central part of the story is that Decatur Hotels claimed they could not find any domestic workers to work in hotels. As such, DH sought and received approval from the US Department of Labor to bring in "guest workers".

To recruit guest workers, DH had to certify to the U.S. government that it could not find U.S. workers to fill the jobs. Indeed, in its request for labor certification, Decatur claims to "have offered work to hurricane evacuees" but "no one applied."

Decatur Hotels ultimately paid the immigrant workers wages of between $6/hour and $8/hour. The SPLC contends that Decatur didn't try very hard to find workers willing to do the work at those wages. The SPLC claims that there were many workers, already in New Orleans, willing to do the hotel work at these wages.

Now for the inconsistency. Given that fast food resaturants are paying $10/hour, would you expect that Decatur Hotels would have much luck in attracting domestic workers at between $6 and $8 an hour as the SPLC claims?

–CT

Update: All fire fighters (even the experienced workers) get their raise after all.

This entry was posted on Friday, August 18th, 2006 at 9:48 pm and is filed under Katrina. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.