Wage

A wage is the distribution from an employer of a ''security'' (expected return or profits derived solely from others) paid to an employee. Like interest is paid out to an investor on his investments, a wage is paid (from company earnings) to the employee on the employee's invested assets (time, money, labor, resources, and thought). Some examples of wage distributions 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, and add value to the employee in honor of his principal protected note or net investment.

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

clock

s 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 2-gerah per day freight rate on a contract of affreightment between a charterer and shipmaster, while Law 277 stipulated a -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

.

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.

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.

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.USC 26 § 3401(a)

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 wage
* List of sovereign states in Europe by net average wage
* Marginal factor cost
* Overtime

Political science:
* Labour power
* Proletarian
* Working class
* Wage slavery

References

Further reading

* Galbraith, James Kenneth. ''Created Unequal: the Crisis in American Pay'', in series, ''Twentieth Century Fund Book '. New York: Free Press, 1998.

External links

*

U.S. Bureau of Labor Statistics


– click Chapter 8


– 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

{{Authority control

Wages and salaries
National accounts