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A wage is the distribution from an
employer Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...
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 A minimum wage is the lowest remuneration Remuneration is the pay or other financial compensationFinancial compensation refers to the act of providing a person with money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, ...
'', ''
prevailing wage In government contracting, a prevailing wage is defined as the hourly 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 t ...
'', and ''yearly bonuses,'' and
remunerative Remuneration is the pay or other financial compensationFinancial compensation refers to the act of providing a person with money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King Georg ...
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 noteA Principal protected note (PPN) is an investment contract with a guaranteed rate of return In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the c ...
or
net investment In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods an ...
. 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 Commission or commissioning may refer to: Business and contracting * Commission (remuneration), a form of payment to an agent for services rendered ** Commission (art), the purchase or the creation of a piece of art most often on behalf of another ...
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 A gratuity (normally called a tip) is a sum of money customarily given by a customer to certain service sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sector Image:Econom ...
paid directly by clients and
employee benefits Employee benefits and (especially in British English British English (BrE) is the standard dialect of the English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England ...
which are non-monetary forms of compensation. Since
wage labour Wage labour (also wage labor in American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. Curren ...

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 Wage labour (also wage labor in American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. Curren ...

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 Piece work (or piecework) is any type of employment Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away ...
). The earliest such unit of time, still frequently used, is the day of work. The invention of
clock A clock or a timepiece is a device used to measure and indicate time Time is the continued sequence of existence and event (philosophy), events that occurs in an apparently irreversible process, irreversible succession from the past ...

clock
s coincided with the elaborating of subdivisions of time for work, of which the
hour An hour (symbol A symbol is a mark, sign, or that indicates, signifies, or is understood as representing an , , or . Symbols allow people to go beyond what is n or seen by creating linkages between otherwise very different s and s. All ...
became the most common, underlying the concept of an hourly wage. Wages were paid in the Middle Kingdom of ancient Egypt,
ancient Greece Ancient Greece ( el, Ἑλλάς, Hellás) was a civilization belonging to a period of History of Greece, Greek history from the Greek Dark Ages of the 12th–9th centuries BC to the end of Classical Antiquity, antiquity ( AD 600). This era wa ...
, and ancient Rome. Following the unification of the
city-state A city-state is an independent sovereign Sovereign is a title which can be applied to the highest leader in various categories. The word is borrowed from Old French Old French (, , ; Modern French French ( or ) is a Romance la ...
s in
Assyria Assyria (), also called the Assyrian Empire, was a Mesopotamia Mesopotamia ( grc, Μεσοποταμία ''Mesopotamíā''; ar, بِلَاد ٱلرَّافِدَيْن ; syc, ܐܪܡ ܢܗܪ̈ܝܢ, or , ) is a historical region of We ...

Assyria
and
Sumer Sumer ()The name is from Akkadian language, Akkadian '; Sumerian language, Sumerian ''kig̃ir'', written and ,approximately "land of the civilized kings" or "native land". means "native, local", iĝir NATIVE (7x: Old Babylonian)from ''The ...

Sumer
by
Sargon of Akkad Sargon of Akkad (; akk, 𒊬𒊒𒄀 ''Šar-ru-gi''), also known as Sargon the Great, was the first ruler of the Akkadian Empire The Akkadian Empire () was the first ancient empire of Mesopotamia after the long-lived civilization of Sumer. ...

Sargon of Akkad
into a single empire ruled from his home city circa 2334 BC, common Mesopotamian standards for
length Length is a measure of distance Distance is a numerical measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be us ...

length
,
area Area is the quantity Quantity is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by assigning a numerical value in ...

area
,
volume Volume is a scalar quantity expressing the amount Quantity or amount is a property that can exist as a multitude Multitude is a term for a group of people who cannot be classed under any other distinct category, except for their shared fact ...

volume
,
weight In science Science () is a systematic enterprise that Scientific method, builds and organizes knowledge in the form of Testability, testable explanations and predictions about the universe."... modern science is a discovery as well as ...

weight
, and
time Time is the continued sequence of existence and event (philosophy), events that occurs in an apparently irreversible process, irreversible succession from the past, through the present, into the future. It is a component quantity of various me ...

time
used by
artisan Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functional or strictly decorative, for example fur ...

artisan
guild A guild is an association of artisan Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functiona ...
s were promulgated by
Naram-Sin of Akkad Naram-Sin also transcribed Narām-Sîn or Naram-Suen ( akk, 𒀭𒈾𒊏𒄠𒀭𒂗𒍪: '' DNa-ra-am D Sîn'', meaning "Beloved of the Moon God Sîn", the "𒀭 ''Dingir'' (, usually transliteration of cuneiform, transliterated DIĜIR, ) is a ...
(c. 2254–2218 BC), Sargon's grandson, including
shekel Shekel or sheqel ( akk, 𒅆𒅗𒇻 ''šiqlu'' or ''siqlu,'' he, שקל, plural or shekels, Phoenician: ) is an ancient Near Eastern coin, usually of silver Silver is a chemical element In chemistry, an element is a pure Ch ...
s. (c. 1755–1750 BC) stipulated a 2-shekel
prevailing wage In government contracting, a prevailing wage is defined as the hourly 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 t ...
for each 60- gur (300-
bushel A bushel (abbreviation: bsh. or bu.) is an imperial Imperial is that which relates to an empire, emperor, or imperialism. Imperial or The Imperial may also refer to: Places United States * Imperial, California * Imperial, Missouri * Imperi ...
) vessel constructed in an
employment contract An employment contract or contract of employment is a kind of contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', ...
between a
shipbuilder Shipbuilding is the construction of ships and other Watercraft, floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roo ...

shipbuilder
and a
ship-owner A ship-owner is the owner of a merchant vessel A merchant is a person who trades in commodities produced by other people, especially one who trades with foreign countries. Historically, a merchant is anyone who is involved in business Bu ...
. Law 275 stipulated a
ferry A ferry is a vessel used to carry passengers, and sometimes vehicles and cargo, across a body of water. A passenger ferry with many stops, such as in Venice Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern It ...

ferry
of 3-
gerah A gerah () is an ancient Hebrew unit of weight In science Science () is a systematic enterprise that Scientific method, builds and organizes knowledge in the form of Testability, testable explanations and predictions about the universe.". ...
per day on a
charterparty A charterparty (sometimes charter-party) is a maritime contract between a shipowner and a "charterer" for the hire of either a ship for the carriage of passengers or cargo, or a yacht for pleasure purposes. Charter party is a contract of carriage o ...
between a ship charterer and a
shipmaster A sea captain, ship's captain, captain, master, or shipmaster, is a high-grade licensed mariner 200px, A sample United States Merchant Marine license issued by the United States Coast Guard in 2006 A licensed mariner is a sailor who holds a li ...

shipmaster
. Law 276 stipulated a 2-gerah per day
freight rate A ''freight rate'' (historically and in ship chartering simply freight) is a price at which a certain cargo is delivered from one point to another. The price depends on the form of the cargo, the mode of transport (truck, ship, train, aircraft), t ...
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 In microeconomics Microeconomics is a branch of that studies the behavior of individuals and in making decisions regarding the allocation of and the interactions among these individuals and firms. Microeconomics focuses on the study ...

supply and demand
), labour organisation, legislation, and tradition. Market forces are perhaps more dominant in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
, while tradition,
social structure In the social sciences, social structure is the patterned social arrangements in society that are both emergence, emergent from and determinant of the Structure and agency, actions of individuals. Likewise, society is believed to be grouped int ...
and
seniority Seniority is the state of being older or placed in a higher position of status relative to another individual, group, or organization. For example, one employee may be senior to another either by role or rank (such as a CEO vice a manager), or by ...
, perhaps play a greater role in
Japan Japan ( ja, 日本, or , and formally ) is an island country An island country or an island nation is a country A country is a distinct territory, territorial body or political entity. It is often referred to as the land of an 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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
, wages for most workers are set by
market forces A market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in Exchange (economics), exchange. While parties may exchange goods and services by barter, most markets rely on sellers of ...

market forces
, or else by
collective bargaining Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights for workers. The int ...
, where a
labor union A trade union (or a labor union in American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. Cu ...
negotiates on the workers' behalf. The
Fair Labor Standards Act The Fair Labor Standards Act of 1938 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of Minor (law), mino ...
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 A minimum wage is the lowest remuneration Remuneration is the pay or other financial compensationFinancial compensation refers to the act of providing a person with money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, ...
rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-called
prevailing wage In government contracting, a prevailing wage is defined as the hourly 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 t ...
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 lawMinimum 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. History Until r ...
s 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 The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large The ''United States Sta ...

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 Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...
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 Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...
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{{no footnotes, date=April 2010 Compensation of employees (CE) is a statistical term used in national accounts National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measu ...
*
Employee benefit Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black border edge.jpg, 300px, ''Hip, Hip, Hurrah!'' ...
(non-monetary compensation in exchange for labor) *
Employment Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black border edge.jpg, 300px, ''Hip, Hip, Hurrah!'' ...

Employment
*
Labour economics Labour economics seeks to understand the functioning and dynamics of the markets Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland ...
*
List of countries by average wage The average wage The national average salary (or national average wage) is the average, mean salary for the working population of a nation. It is calculated by summation, summing all the annual salaries of all persons in work and Division (mathema ...
*
Performance-related pay Performance-related pay or pay for performance, not to be confused with performance-related pay rise, is a salary or wages paid system based on positioning the individual, or team, on their pay band according to how well they perform. Car salesmen o ...
*
Wage labour Wage labour (also wage labor in American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. Curren ...

Wage labour
*
Wage share In economics, the wage or labor share is the part of national income, or the income of a particular economic sector, allocated to wages (labor (economics), labor). It is related to the capital or profit share, the part of income going to capital (e ...
*
Real wage US net productivity compared to real wages. Real wages are wages adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought. This term is used in contrast to nominal wages or unadjusted wage ...
*
List of sovereign states in Europe by net average wage A ''list'' is any set of items. List or lists may also refer to: People * List (surname)List or Liste is a European surname. Notable people with the surname include: List * Friedrich List (1789–1846), German economist * Garrett List (194 ...
* Marginal factor cost *
Overtime Overtime is the amount of time someone works beyond normal working hours Working time is the period of time Time is the indefinite continued sequence, progress of existence and event (philosophy), events that occur in an apparently irre ...
Political science: *
Labour power Labour power (in german: Arbeitskraft; in french: force de travail) is a key concept used by Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher A philosopher is someone who practices philosophy ...
*
Proletarian The proletariat ( from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of t ...
*
Working class The working class (or labouring class) comprises those engaged in manual-labour occupations or industrial work, who are remunerated via waged or salaried contracts. Working-class occupations (see also "Designation of workers by collar color ...
*
Wage slavery Wage slavery is a term used to describe a situation where a person's entire livelihood A person's livelihood (derived from ''life-lode'', "way of life"; cf. Old German, OG ''lib-leit'') refers to their "means of securing the basic necessities (food ...


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