Wage
Encyclopedia
A wage is a compensation, usually financial, received by workers in exchange
for their labor.
Compensation in terms of wages is given to workers and compensation in terms of salary
is given to employees. Compensation is a monetary benefit given to employees in return for the services provided by them.
), as is common in the United States
, or wage rates may be influenced by other factors such as tradition, social structure
and seniority
, as in Japan
.
Several countries have enacted a statutory minimum wage
rate that sets a price floor
for certain kinds of labor.
, wages for most workers are set by market forces
, or else by collective bargaining
, where a labor union negotiates on the workers' behalf. The Fair 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 own minimum wage
rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-called prevailing wage
as determined according to the Davis-Bacon Act
or its state equivalent. Activists have undertaken to promote the idea of a living wage rate
which account for living expenses and other basic necessities, setting the living wage rate much higher than current minimum wage law
s require.
Political science:
Coincidence of wants
The coincidence of wants problem is an important category of transaction costs that impose severe limitations on economies lacking money and thus dominated by barter or other in-kind transactions...
for their labor.
Compensation in terms of wages is given to workers and compensation in terms of salary
Salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
is given to employees. Compensation is a monetary benefit given to employees in return for the services provided by them.
Determinants of wage rates
Depending on the structure and traditions of different economies around the world, wage rates are either the product of market forces (supply and demandSupply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
), as is common in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, or wage rates may be influenced by other factors such as tradition, social structure
Social structure
Social structure is a term used in the social sciences to refer to patterned social arrangements in society that are both emergent from and determinant of the actions of the individuals. The usage of the term "social structure" has changed over time and may reflect the various levels of analysis...
and seniority
Seniority
Seniority is the concept of a person or group of people being in charge or in command of another person or group. This control is often granted to the senior person due to experience or length of service in a given position, but it is not uncommon for a senior person to have less experience or...
, as in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
.
Several countries have enacted a statutory minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
rate that sets a price floor
Price floor
A price floor is a government- or group-imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price.-Effectiveness of price floors:...
for certain kinds of labor.
Wages in the United States
In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, wages for most workers are set by market forces
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
, or else by collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
, where a labor union negotiates on the workers' behalf. The Fair Labor Standards Act
Fair Labor Standards Act
The Fair Labor Standards Act of 1938 is a federal statute of the United States. The FLSA established a national minimum wage, guaranteed 'time-and-a-half' for overtime in certain jobs, and prohibited most employment of minors in "oppressive child labor," a term that is defined in the statute...
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 own minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-called prevailing wage
Prevailing wage
In government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. Prevailing wages are established by regulatory agencies for each trade and occupation employed in the...
as determined according to the Davis-Bacon Act
Davis-Bacon Act
The Davis–Bacon Act of 1931 is a United States federal law which established the requirement for paying prevailing wages on public works projects...
or its state equivalent. Activists have undertaken to promote the idea of a living wage rate
Living wage
In public policy, a living wage is the minimum hourly income necessary for a worker to meet basic needs . These needs include shelter and other incidentals such as clothing and nutrition...
which account for living expenses and other basic necessities, setting the living wage rate much higher than current minimum wage law
Minimum wage law
Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation....
s require.
See also
- Compensation of employeesCompensation of employeesCompensation of employees is a statistical term used in national accounts, balance of payments statistics and sometimes in corporate accounts as well...
- Employee benefitEmployee benefitEmployee benefits and benefits in kind are various non-wage compensations provided to employees in addition to their normal wages or salaries...
(non-monetary compensation in exchange for labor) - EmploymentEmploymentEmployment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
- Labour in Economics
- List of Average Wages per Country
- Performance-related payPerformance-related payPerformance-related pay is money paid to someone relating to how well one works. Car salesmen, production line workers, for example, may be paid in this way, or through commission....
- Wage labourWage labourWage labour is the socioeconomic relationship between a worker and an employer, where the worker sells their labour under a formal or informal employment contract. These transactions usually occur in a labour market where wages are market determined...
- Wage shareWage shareThe wage share is the ratio between compensation of employees and one of the following variables:#gross domestic product at market prices#gross domestic product at factor cost....
- Real wageReal wageThe term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages. Real wages provide a clearer representation of an individual's wages....
- Minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
- List of sovereign states in Europe by net average wage
Political science:
- Labour powerLabor powerLabour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...
- Proletarian
- Working classWorking classWorking class is a term used in the social sciences and in ordinary conversation to describe those employed in lower tier jobs , often extending to those in unemployment or otherwise possessing below-average incomes...
- Wage slaveryWage slaveryWage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor, and to highlight similarities between owning and employing a person...
External links
- U.S. Bureau of Labor Statistics
- Wealth of Nations - click Chapter 8
- Understanding Capitalism Part III: Wages and Labor Markets - Critical of capitalism
- U.S. Department of Labor: Minimum Wage Laws - Different laws by State
- Average U.S. farm and non-farm wage
- LaborFair Resources - Link to Fair Labor Practices
- The Truth Behind Wages in Mining - Link to An Article Abouth How Wages are measured and Current Standards for Mining Professionals
- Database Central Europe - Data on average wages in Central Europe and in Emerging Markets