BARTER BALANCE

BARTER BALANCE/Image: Michael Moffa

Surveys report that younger job applicants are expressing a willingness to sacrifice pay for perks related to on-the-job use of social media, cell phones and other digital accessories. Tacitly, this seems to represent a reversion to an older economic model of exchange: barter—an exchange of goods and services without money as an intermediate medium of exchange. This raises the very interesting question and prospect of a possible expansion of the role of and trend toward barter-based compensation packages.

According to the 2011 Cisco Connected World Technology Report, an international survey of 3,000 college students and recent graduates who started their first jobs, “More than two of five would accept a lower-paying job that had more flexibility with regard to device choice, social media access, and mobility than a higher-paying job with less flexibility.”

(Although alternatively and erroneously described in the media as a willingness to forgo a raise, the willingness to accept a lower-paying job is not equivalent to that, since forgoing a gain on top of what one already has is not psychologically the same thing as accepting a loss or cut, as I argued in my article “The Simple Math Underlying Why We Hate to Lose”. In this analysis, the latter interpretation based on the willingness to take a cut—and the one truest to the Cisco report—shall be adopted.)

Taxable and Untaxable Barter-Based Perks

Like a barter system, this sacrifice of money for perks has one distinct advantage over the reverse exchange of perks for money and over a simply dollar-denominated compensations package: It may be beyond the reach of the tax man. For example, the IRS states that, “If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer’s premises, the value is not included in your (taxable) compensation. The gym must be used primarily by employees, their spouses, and their dependent children.” However, the IRS adds that, “If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation.” So whether a perk, fringe benefit or barter-benefit is taxable will depend upon the tax code details.

In any case, employers and employees alike may want to take a long, hard look at expanding such forms of barter as a way of keeping taxes and costs down, respectively.

The Vatican Model of Salary and Perk Negotiation: Indulgences

The current willingness of job candidates to give up money in exchange for various freedoms and privileges may, in various instances, be smart and suggest an expanded role for fringe benefits, perks and what may be called “indulgences” , on analogy with the alternately venerated and vilified Vatican-supported sin-relief scheme, as partial substitutes for more tax-vulnerable and costlier employee compensation packages.

The system of indulgences established by the early Catholic church and vehemently assailed by Martin Luther, allowed, on some interpretations and in some of its more abused forms, remission of sin by purchase, reflected in this old proverb: “As soon as money in the coffer rings, the soul from purgatory’s fire springs.”

Cash for Communion and Communications

The idea, of which there were as many variations as there were believed to be angels on heads of pins, proposed various forms of penance to reduce the term to be served as punishment in the afterlife—i.e., “temporal” remission of sins. Naturally, given the obvious benefits for all concerned, cash for the church treasury came to be accepted as one of salvation’s penitential accelerants. The similarity with cash-for-Facebook workplace trades is obvious: Give up cash in exchange for “communion”—in this case, in the form of digital communication granted as a workplace indulgence.

Of course, one obvious difference between buying forgiveness from your church and negotiating a job package with your employer is that in the former instance one gives up money one has, whereas in the latter one waives money one doesn’t have. That difference does suggest another possible approach to on-the-job perks, such as paying for the privilege (if not right) to use social media and cell phones at work on a for-fee basis. Employees could simply pay a per-use or general monthly fee for the opportunity to access these tools at work.

For-Fee Workplace Digital Access—Merits and Demerits

A chief merit of such an approach is that it could help forestall a decline in average salaries that widespread trading of income for perks might lead to—especially if a prospective employer invokes the new, lower industry average as a standard, but without mention of the perks as part of the compensation package, or if the employer wants to take barter to another level, e.g., by providing free or subsidized accommodation, meals, etc., in exchange for a low(er) salary (not unlike what many Chinese factory workers are offered).

Its chief demerit is that a for-fee scheme would preclude such digital privileges’ becoming rights and would increase both the tax exposure of the employee and the wage costs of the employer, if an employee opts out of the program after initially opting in.

Willing to Give up How Much?

Crucial to estimating the impact either way, i.e., with or without cash paid or cash waived, is determining precisely how much the average recruit is willing to forgo as income in order to have such broadened digital access at work. If other studies about such contemplated tradeoffs are any indicator, that swap may be substantial: A recent McCann Worldgroup global survey of 7,000 16-to-30-year-olds reports that 53% of young people would sooner lose their sense of smell than their access to their technology (presumably primarily digital).

That tradeoff actually makes sense: If communion and communication with others is—as global trends suggest–increasingly remote and digital, it doesn’t matter much if either of you has had a shower, has B.O. because you haven’t, or has daubed on some Chanel or Aqua Velva as backup.

Like the system of salary cut-for-digital access barter that can facilitate the spread and use of such remote technologies, and like the Holy See’s offer of indulgences, the tradeoff of a sense of smell in exchange for technology could be a good deal…

….until or unless on-the-job access to that technology becomes a taxable perk—or having a sense of smell becomes tax-deductible, whichever comes first (as though we don’t already know).



Like this article? Subscribe today! We also offer tons of free eBooks on career and recruiting topics - check out Get a Better Job the Right Way and Why It Matters Who Does Your Recruiting.
in Compensation and Benefits]