The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (July 2024) |
A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as minimum wage, prevailing wage, and yearly bonuses, and remunerative payments such as prizes and tip 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 with salaried work, in which the employer pays an arranged amount at steady intervals (such as a week or month) regardless of hours worked, with commission 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 or gratuity paid directly by clients and employee benefits which are non-monetary forms of compensation. Since wage labour is the predominant form of work, the term "wage" sometimes refers to all forms (or all monetary forms) of employee compensation.
Origins and necessary components
Wage labour involves the exchange of money for time spent at work. As Moses I. Finley lays out the issue in The Ancient Economy:
- The very idea of wage-labour requires two difficult conceptual steps. First it requires the abstraction of a man's labour from both his person and the product of his work. When one purchases an object from an independent craftsman ... one has not bought his labour but the object, which he had produced in his own time and under his own conditions of work. But when one hires labour, one purchases an abstraction, labour-power, which the purchaser then uses at a time and under conditions which he, the purchaser, not the "owner" of the labour-power, determines (and for which he normally pays after he has consumed it). Second, the wage labour system requires the establishment of a method of measuring the labour one has purchased, for purposes of payment, commonly by introducing a second abstraction, namely labour-time.
The wage is the monetary measure corresponding to the standard units of working time (or to a standard amount of accomplished work, defined as a piece rate). The earliest such unit of time, still frequently used, is the day of work. The invention of clocks coincided with the elaborating of subdivisions of time for work, of which the hour became the most common, underlying the concept of an hourly wage.
Wages were paid in the Middle Kingdom of ancient Egypt,ancient Greece, and ancient Rome. Following the unification of the city-states in Assyria and Sumer by Sargon of Akkad into a single empire ruled from his home city circa 2334 BC, common Mesopotamian standards for length, area, volume, weight, and time used by artisan guilds were promulgated by Naram-Sin of Akkad (c. 2254–2218 BC), Sargon's grandson, including shekels.Codex Hammurabi Law 234 (c. 1755–1750 BC) stipulated a 2-shekel prevailing wage for each 60-gur (300-bushel) vessel constructed in an employment contract between a shipbuilder and a ship-owner. Law 275 stipulated a ferry rate of 3-gerah per day on a charterparty between a ship charterer and a shipmaster. Law 276 stipulated a 21⁄2-gerah per day freight rate on a contract of affreightment between a charterer and shipmaster, while Law 277 stipulated a 1⁄6-shekel per day freight rate for a 60-gur vessel.
Determinants of wage rates
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. Market forces are perhaps more dominant in the United States, while tradition, social structure and seniority, perhaps play a greater role in Japan.[citation needed]
Wage differences
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 the U.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. Similarly, white men made about 84% the wage of Asian men, and black men 64%. These are overall averages and are not adjusted for the type, amount, and quality of work done.
Effects
Corruption
It is known that the wage level of employees in the public 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.
Wages in the United States
Seventy-five million workers earned hourly wages in the United States in 2012, making up 59% of employees. In the United States, 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 laws require. The minimum wage rate is there to protect the well being of the working class.
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.
Definitions
For purposes of federal income tax withholding, 26 U.S.C. § 3401(a) defines the term "wages" specifically for chapter 24 of the Internal 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 an employee 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 an employee for his employer," the definition goes on to list 23 exclusions that must also be applied.
See also
- Compensation of employees
- Employee benefit (non-monetary compensation in exchange for labor)
- Employment
- Labour economics
- List of countries by average wage
- Performance-related pay
- Wage labour
- Wage share
- Real wages
- List of sovereign states in Europe by net average wage
- Marginal factor cost
- Overtime
Political science:
- Labour power
- Proletarian
- Working class
- Wage slavery
References
- Finley, Moses I. (1973). The ancient economy. Berkeley: University of California Press. p. 65. ISBN 9780520024366.
- Thompson, E. P. (1967). "Time, Work-Discipline, and Industrial Capitalism". Past and Present (38): 56–97. doi:10.1093/past/38.1.56. JSTOR 649749.
- Dohrn-van Rossum, Gerhard (1996). History of the hour: Clocks and modern temporal orders. Thomas Dunlap (trans.). Chicago: University of Chicago Press. ISBN 9780226155104.
- Ezzamel, Mahmoud (July 2004). "Work Organization in the Middle Kingdom, Ancient Egypt". Organization. 11 (4): 497–537. doi:10.1177/1350508404044060. ISSN 1350-5084. S2CID 143251928.
- Finley, Moses I. (1973). The ancient economy. Berkeley: University of California Press. ISBN 9780520024366.
- Powell, Marvin A. (1995). "Metrology and Mathematics in Ancient Mesopotamia". In Sasson, Jack M. (ed.). Civilizations of the Ancient Near East. Vol. III. New York, NY: Charles Scribner's Sons. p. 1955. ISBN 0-684-19279-9.
- Hammurabi (1903). "Code of Hammurabi, King of Babylon". Records of the Past. 2 (3). Translated by Sommer, Otto. Washington, DC: Records of the Past Exploration Society: 85. Retrieved June 20, 2021.
234. If a shipbuilder builds ... as a present [compensation].
- Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 83. Retrieved June 20, 2021.
§234. If a boatman build ... silver as his wage.
- Hammurabi (1910). "Code of Hammurabi, King of Babylon". Avalon Project. Translated by King, Leonard William. New Haven, CT: Yale Law School. Retrieved June 20, 2021.
- Hammurabi (1903). "Code of Hammurabi, King of Babylon". Records of the Past. 2 (3). Translated by Sommer, Otto. Washington, DC: Records of the Past Exploration Society: 88. Retrieved June 20, 2021.
275. If anyone hires a ... day as rent therefor.
- Hammurabi (1904). "Code of Hammurabi, King of Babylon" (PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd ed.). Chicago: University of Chicago Press. p. 95. Retrieved June 20, 2021.
§275. If a man hire ... its hire per day.
- "Student Login". Edgenuity. – Education 2020 Homeschool console, Vocabulary Assignment, definition entry for "wage rate" (may require login to view)
- Magnusson, Charlotta. "Why Is There A Gender Wage Gap According To Occupational Prestige?." Acta Sociologica (Sage Publications, Ltd.) 53.2 (2010): 99-117. Academic Search Complete. Web. 26 Feb. 2015.
- U.S. Bureau of Labor Statistics. "Earnings of Women and Men by Race and Ethnicity, 2007" Accessed June 29, 2012
- Asli Demirgüç-Kunt, Michael Lokshin, Vladimir Kolchin (8 April 2023). "Effects of public sector wages on corruption: Wage inequality matters". Journal of Comparative Economics. 51 (3): 941–959. doi:10.1016/j.jce.2023.03.005. hdl:10986/35521.
{{cite journal}}: CS1 maint: multiple names: authors list (link) - "Employees" as a category excludes all those who are self-employed, and this statistics only considers workers over the age of 16. U.S. Department of Labor. Bureau of Labor Statistics (2013-02-26), Characteristics of Minimum Wage Workers: 2012
- Tennant, Michael. "Minimum Wage The Ups & Downs." New American (08856540) 30.12 (2014): 10-16. Academic Search Complete. Web. 26 Feb. 2015.
- "Living Wage Calculator". livingwage.mit.edu. Retrieved 2023-10-02.
- Aeppel, Timothy (August 29, 2022). "North American companies send in the robots, even as productivity slumps". Reuters.
- USC 26 § 3401(a)
Further reading
- Galbraith, James Kenneth. Created Unequal: the Crisis in American Pay, in series, Twentieth Century Fund Book[s]. New York: Free Press, 1998. ISBN 0-684-84988-7
External links
- Lebergott, Stanley (2002). "Wages and Working Conditions". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563
- U.S. Bureau of Labor Statistics
- Wealth of Nations – click Chapter 8
- U.S. Department of Labor: Minimum Wage Laws – Different laws by State
- Average U.S. farm and non-farm wage
- Prices and Wages by Decade library guide – Prices and Wages research guide at the University of Missouri libraries
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject You may improve this article discuss the issue on the talk page or create a new article as appropriate July 2024 Learn how and when to remove this message A wage is payment made by an employer to an employee for work done in a specific period of time Some examples of wage payments include compensatory payments such as minimum wage prevailing wage and yearly bonuses and remunerative payments such as prizes and tip 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 with salaried work in which the employer pays an arranged amount at steady intervals such as a week or month regardless of hours worked with commission 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 or gratuity paid directly by clients and employee benefits which are non monetary forms of compensation Since wage labour is the predominant form of work the term wage sometimes refers to all forms or all monetary forms of employee compensation Origins and necessary componentsWage labour involves the exchange of money for time spent at work As Moses I Finley lays out the issue in The Ancient Economy The very idea of wage labour requires two difficult conceptual steps First it requires the abstraction of a man s labour from both his person and the product of his work When one purchases an object from an independent craftsman one has not bought his labour but the object which he had produced in his own time and under his own conditions of work But when one hires labour one purchases an abstraction labour power which the purchaser then uses at a time and under conditions which he the purchaser not the owner of the labour power determines and for which he normally pays after he has consumed it Second the wage labour system requires the establishment of a method of measuring the labour one has purchased for purposes of payment commonly by introducing a second abstraction namely labour time The wage is the monetary measure corresponding to the standard units of working time or to a standard amount of accomplished work defined as a piece rate The earliest such unit of time still frequently used is the day of work The invention of clocks coincided with the elaborating of subdivisions of time for work of which the hour became the most common underlying the concept of an hourly wage Wages were paid in the Middle Kingdom of ancient Egypt ancient Greece and ancient Rome Following the unification of the city states in Assyria and Sumer by Sargon of Akkad into a single empire ruled from his home city circa 2334 BC common Mesopotamian standards for length area volume weight and time used by artisan guilds were promulgated by Naram Sin of Akkad c 2254 2218 BC Sargon s grandson including shekels Codex Hammurabi Law 234 c 1755 1750 BC stipulated a 2 shekel prevailing wage for each 60 gur 300 bushel vessel constructed in an employment contract between a shipbuilder and a ship owner Law 275 stipulated a ferry rate of 3 gerah per day on a charterparty between a ship charterer and a shipmaster Law 276 stipulated a 21 2 gerah per day freight rate on a contract of affreightment between a charterer and shipmaster while Law 277 stipulated a 1 6 shekel per day freight rate for a 60 gur vessel Determinants of wage ratesDepending 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 Market forces are perhaps more dominant in the United States while tradition social structure and seniority perhaps play a greater role in Japan citation needed Wage differences 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 the U 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 Similarly white men made about 84 the wage of Asian men and black men 64 These are overall averages and are not adjusted for the type amount and quality of work done EffectsCorruption It is known that the wage level of employees in the public 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 Wages in the United StatesHistorical graph of real wages in the US from 1964 to 2005Wages in the United States Nominal wages Adjusted for inflation wages Seventy five million workers earned hourly wages in the United States in 2012 making up 59 of employees In the United States 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 laws require The minimum wage rate is there to protect the well being of the working class A heat map of the United States by living wage for a single childless individual according to the MIT living wage calculator as of 2023 15 15 99 16 00 16 99 17 00 17 99 18 00 18 99 19 00 19 99 20 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 DefinitionsFor purposes of federal income tax withholding 26 U S C 3401 a defines the term wages specifically for chapter 24 of the Internal 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 an employee 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 an employee for his employer the definition goes on to list 23 exclusions that must also be applied See alsoCompensation of employees Employee benefit non monetary compensation in exchange for labor Employment Labour economics List of countries by average wage Performance related pay Wage labour Wage share Real wages List of sovereign states in Europe by net average wage Marginal factor cost Overtime Political science Labour power Proletarian Working class Wage slaveryReferencesFinley Moses I 1973 The ancient economy Berkeley University of California Press p 65 ISBN 9780520024366 Thompson E P 1967 Time Work Discipline and Industrial Capitalism Past and Present 38 56 97 doi 10 1093 past 38 1 56 JSTOR 649749 Dohrn van Rossum Gerhard 1996 History of the hour Clocks and modern temporal orders Thomas Dunlap trans Chicago University of Chicago Press ISBN 9780226155104 Ezzamel Mahmoud July 2004 Work Organization in the Middle Kingdom Ancient Egypt Organization 11 4 497 537 doi 10 1177 1350508404044060 ISSN 1350 5084 S2CID 143251928 Finley Moses I 1973 The ancient economy Berkeley University of California Press ISBN 9780520024366 Powell Marvin A 1995 Metrology and Mathematics in Ancient Mesopotamia In Sasson Jack M ed Civilizations of the Ancient Near East Vol III New York NY Charles Scribner s Sons p 1955 ISBN 0 684 19279 9 Hammurabi 1903 Code of Hammurabi King of Babylon Records of the Past 2 3 Translated by Sommer Otto Washington DC Records of the Past Exploration Society 85 Retrieved June 20 2021 234 If a shipbuilder builds as a present compensation Hammurabi 1904 Code of Hammurabi King of Babylon PDF Liberty Fund Translated by Harper Robert Francis 2nd ed Chicago University of Chicago Press p 83 Retrieved June 20 2021 234 If a boatman build silver as his wage Hammurabi 1910 Code of Hammurabi King of Babylon Avalon Project Translated by King Leonard William New Haven CT Yale Law School Retrieved June 20 2021 Hammurabi 1903 Code of Hammurabi King of Babylon Records of the Past 2 3 Translated by Sommer Otto Washington DC Records of the Past Exploration Society 88 Retrieved June 20 2021 275 If anyone hires a day as rent therefor Hammurabi 1904 Code of Hammurabi King of Babylon PDF Liberty Fund Translated by Harper Robert Francis 2nd ed Chicago University of Chicago Press p 95 Retrieved June 20 2021 275 If a man hire its hire per day Student Login Edgenuity Education 2020 Homeschool console Vocabulary Assignment definition entry for wage rate may require login to view Magnusson Charlotta Why Is There A Gender Wage Gap According To Occupational Prestige Acta Sociologica Sage Publications Ltd 53 2 2010 99 117 Academic Search Complete Web 26 Feb 2015 U S Bureau of Labor Statistics Earnings of Women and Men by Race and Ethnicity 2007 Accessed June 29 2012 Asli Demirguc Kunt Michael Lokshin Vladimir Kolchin 8 April 2023 Effects of public sector wages on corruption Wage inequality matters Journal of Comparative Economics 51 3 941 959 doi 10 1016 j jce 2023 03 005 hdl 10986 35521 a href wiki Template Cite journal title Template Cite journal cite journal a CS1 maint multiple names authors list link Employees as a category excludes all those who are self employed and this statistics only considers workers over the age of 16 U S Department of Labor Bureau of Labor Statistics 2013 02 26 Characteristics of Minimum Wage Workers 2012 Tennant Michael Minimum Wage The Ups amp Downs New American 08856540 30 12 2014 10 16 Academic Search Complete Web 26 Feb 2015 Living Wage Calculator livingwage mit edu Retrieved 2023 10 02 Aeppel Timothy August 29 2022 North American companies send in the robots even as productivity slumps Reuters USC 26 3401 a Further readingGalbraith James Kenneth Created Unequal the Crisis in American Pay in series Twentieth Century Fund Book s New York Free Press 1998 ISBN 0 684 84988 7External linksLook up wage in Wiktionary the free dictionary Wikimedia Commons has media related to Wages Wikiquote has quotations related to Wage Lebergott Stanley 2002 Wages and Working Conditions In David R Henderson ed Concise Encyclopedia of Economics 1st ed Library of Economics and Liberty OCLC 317650570 50016270 163149563 U S Bureau of Labor Statistics Wealth of Nations click Chapter 8 U S Department of Labor Minimum Wage Laws Different laws by State Average U S farm and non farm wage Prices and Wages by Decade library guide Prices and Wages research guide at the University of Missouri libraries
