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Awage is payment made by anemployer to an employee forwork done in a specific period of time. Some examples of wage payments includecompensatory payments such asminimum wage,prevailing wage, andyearly bonuses, andremunerative payments such asprizes andtip payouts. Wages are part of the expenses that are involved in running a business. It is an obligation to the employee regardless of the profitability of the company.
Payment by wage contrasts withsalaried work, in which the employer pays an arranged amount at steady intervals (such as a week or month) regardless of hours worked, withcommission which conditions pay on individual performance, and with compensation based on the performance of the company as a whole. Waged employees may also receive tips orgratuity paid directly by clients andemployee benefits which are non-monetary forms of compensation. Sincewage labour is the predominant form of work, the term "wage" sometimes refers to all forms (or all monetary forms) of employee compensation.
Wage labour involves the exchange of money for time spent at work. AsMoses I. Finley lays out the issue inThe Ancient Economy:
The wage is the monetary measure corresponding to the standard units of working time (or to a standard amount of accomplished work, defined as apiece rate). The earliest such unit of time, still frequently used, is the day of work. The invention ofclocks coincided with the elaborating of subdivisions of time for work, of which thehour became the most common, underlying the concept of an hourly wage.[2][3]
Wages were paid in theMiddle Kingdom of ancient Egypt,[4]ancient Greece,[5] and ancient Rome.[5] Following the unification of thecity-states inAssyria andSumer bySargon of Akkad into asingle empire ruled from hishome city circa 2334 BC,common Mesopotamian standards forlength,area,volume,weight, andtime used byartisanguilds were promulgated byNaram-Sin of Akkad (c. 2254–2218 BC), Sargon's grandson, includingshekels.[6]Codex Hammurabi Law 234 (c. 1755–1750 BC) stipulated a 2-shekelprevailing wage for each 60-gur (300-bushel)vessel constructed in anemployment contract between ashipbuilder and aship-owner.[7][8][9] Law 275 stipulated aferryrate of 3-gerah per day on acharterparty between aship charterer and ashipmaster. Law 276 stipulated a 21⁄2-gerah per dayfreight rate on acontract of affreightment between a charterer and shipmaster, while Law 277 stipulated a1⁄6-shekel per day freight rate for a 60-gur vessel.[10][11][9]
Depending on the structure and traditions of different economies around the world, wage rates will be influenced by market forces (supply and demand), labour organisation, legislation, and tradition.
Even in countries where market forces primarily set wage rates, studies show that there are still differences in remuneration for work based on sex and race. For example, according to theU.S. Bureau of Labor Statistics, in 2007 women of all races made approximately 80% of the median wage of their male counterparts. This is likely due to the supply and demand for women in the market because of family obligations.[12] Similarly, white men made about 84% the wage of Asian men, and black men 64%.[13] These are overall averages and are not adjusted for the type, amount, and quality of work done.
It is known that the wage level of employees in thepublic sector affects the frequency of corruption, and that higher salary levels for public sector workers help reduce corruption. It has also been shown that countries with smaller wage gaps in the public sector have less corruption.[14]
Seventy-five million workers earned hourly wages in the United States in 2012, making up 59% of employees.[15] In theUnited States, wages for most workers are set bymarket forces, or else bycollective bargaining, where alabor union negotiates on the workers' behalf. TheFair Labor Standards Act establishes a minimum wage at the federal level that all states must abide by, among other provisions. Fourteen states and a number of cities have set their ownminimum wage rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-calledprevailing wage as determined according to theDavis–Bacon Act or its state equivalent. Activists have undertaken to promote the idea of aliving wage rate which account for living expenses and other basic necessities, setting the living wage rate much higher than currentminimum wage laws require. The minimum wage rate is there to protect the well being of the working class.[16]
In the second quarter of 2022, the total U.S. labor costs grew up 5.2% year over year, the highest growth since the starting point of the serie in 2001.[18]
For purposes of federal income tax withholding, 26 U.S.C. § 3401(a) defines the term "wages" specifically for chapter 24 of theInternal Revenue Code:
"For purposes of this chapter, the term “wages” means all remuneration (other than fees paid to a public official) for services performed by anemployee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash;" In addition to requiring that the remuneration must be for "services performed by anemployee for his employer," the definition goes on to list 23 exclusions that must also be applied.[19]
234. If a shipbuilder builds ... as a present [compensation].
§234. If a boatman build ... silver as his wage.
275. If anyone hires a ... day as rent therefor.
§275. If a man hire ... its hire per day.
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| Supply and demand | |
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| Markets andFirms | |
| Decision theory andbehavioural economics | |
| Welfare economics | |
| Econometrics andmathematical economics | |
| Other subfields | |
| See also | |
