Should employers be providing Kegerators ?

You won't find me disagreeing with Tony Alexander often. I really enjoying reading Tony's newsletters. I respect his opinions and the simple way he explains complicated economics ideas but some comments he made in this Newshub piece didn't 'feel' right to me.

I use the word feel because I can't argue with the logic of what he saying.

Tony suggests NZ bosses need to stop offering perks, benefits and luxuries and simply pay higher wages. So Yes I agree NZ should be working hard to transition to a higher wage economy. Yes what employee wouldn't want higher wages particularly when facing unpresented inflation.

The issue is in my experience employees (and people is general) don't always make rational decisions when it comes to money and employment. After all we are creatures that are driven first and foremost by our emotions. Having a great boss, a great company culture and perks that make our long work days more enjoyable has been shown in a number of studies to outweigh compensation.

In the article he is quoted as saying "Imagine the scene when the worker goes home in the evening and says to her husband, 'We're only getting a 3 percent wage rise this year, but I love working there, the other people are great, and the boss really cares. She just installed a huge beer fridge!'". Well I actually can imagine that scene that sounds real to me because I can't imagine someone saying I am going to go work somewhere I hate, with boring people and boss that is mean, with no beer fridge but I will get 8% more.

If done well providing benefits for staff are often perceived to have a higher value or utility than an equivalent wage rise. Partly because the way humans evaluate tangible benefits and partly because employees lose roughly a third of all income to taxes. Using Tony's example of a kegerator, for a team of 20 to have three beers every Friday it would cost the employer about $7,000 per annum (purchase price and running cost). If instead this was to be provided as a pay rise each employee would only receive about 12 cents per hour extra after PAYE and ACC. So faced with a $4.80 per week pay rise or three beers, which based on "out of home" pricing I would value at $6 a beer, I will take the beers thanks. I just want to note that the point made here is about perceived value and not to start a debate about alcohol, the same idea applies for espresso coffees, fruit baskets, gym access, etc.

To finish up I am not saying employers shouldn't be trying to increase wages in the current economic climate. Increasing wages is important but employers should also not under estimate how influential benefits, rewards and recognition are to employees along with the positive culture they reinforce. Sometimes it is the little things that mean the most when it comes to staff retention.

https://www.newshub.co.nz/home/money/2022/04/economist-tony-alexander-blasts-kiwi-bosses-for-installing-big-beer-fridges-to-try-keep-staff-instead-of-giving-bigger-pay-rises.html