Bartering means lower wages
I enjoyed reading the recent article in the Summit Daily addressing the issue of an employee bartering pizza for the labors of a technician in a ski shop. I was reminded of those lessons in microeconomics that discussed the elasticity of pizza sales and began thinking of the externalities created by the plague of one employee trading a pizza for an edge tune-up.As I reflected on the incident of costs associated with such a barter transaction, I realized that Eric, a restaurant owner, will do his best to not absorb the cost of materials that he purchased to make a pizza that reduces his personal income. Eric will reduce the wages of every employee by about a penny to cover the cost of employee theft of pizza. Now, I am certain that Eric, like every employer in Summit County, provides his employees with a living wage, health benefits and a retirement plan for exchanging their freedom for working hours. According to a recent study by the Summit Daily, a living wage in the area is about $16.89 an hour. Therefore, Eric will lower the hourly wage that he pays to his restaurant employees to $16.88 per hour. Subsequently, Eric’s employees will either accept the transfer of wages from their own paychecks as a gift to the one employee who traded a pizza for a ski tune-up, or report a theft of a pizza by the employee to Eric, who will fire the employee and raise the hourly wage of his employees back to $16.89 an hour.Of course, by providing his employees with a living wage of $16.89 an hour, Eric will expect his employees to refuse any tips in exchange for their services. Tips create two problems in our economy by transferring the costs of employment to those who give tips to workers and lowering the costs services for those too greedy to not give tips. In addition, tips transfer wealth from low-income tip providers to high-income tip providers due to the lower proportional cost of tips against the greater disposable income of high-income tip providers. Finally, tip income goes unreported, reducing the amount of revenue collected by governmental bodies, reducing the very services most needed by low-income members of our society and straining the resources of social service agencies.
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