Over at Bleeding Heart Libertarians, economist Steven Horwitz poses the following question:
If it is ethically wrong and should be illegal for sellers of goods to raise prices after a disaster, why don't we apply the same logic to individuals in labor markets, such as carpenters and plumbers? Many low income folks are able to command wage premiums after disasters yet there are no laws against it, nor do most people find it ethically wrong. What exactly is the difference between the cases?
I'll spoil the surprise and tell you that, to Horwitz, there is no difference. A good or service for sale - be it water or labor - is a good or service for sale, and the price is subject to supply and demand.
Those who oppose "price gouging" in the wake of a natural disaster, but who oppose caps on wages during the same period, will likely argue that "businesses" (a nebulous term, if you ask me, as it could mean anything from Wal-Mart to a single man selling cups of lemonade to exhausted rescue workers) have more bargaining power than do workers. This allows a business to keep its prices high while paying low wages. How exactly this latter act is possible when demand for labor is high is not clear to me, but perhaps someone with this view will set me straight.
On a related note, kudos to the folks over at Learn Liberty for compiling these videos on the economics of natural disasters. Here's the first one: