What does mean Wages? A fixed regular payment earned for their services typically paid on an hourly, daily or weekly basis. A wage is a compensation paid to employees for work for a company during a period of time. Wages are always paid based on a certain amount of time. For example; Employees who receive wage cannot also receive a salary, but they can receive a commission. A commission is a payment for a specific action. Commissions are most commonly found in the sales industry. Salesmen and women are often paid a base wage and then paid a commission based on how many sales they make during a period. Read in Hindi; मजदूरी का परिचय: अर्थ, परिभाषा, प्रकार और तरीके!
Know and Understand the Wages; their Introduction, Meaning, Definition, Types, and Methods!
Lower level employees are paid based on the amount of time worked. These employees usually have a time sheet or time card to keep track of the hours worked per week. Most modern employers have computerized systems to keep track of hourly employee hours. Employees must log into the system and log out to record their hours worked. Depending on the state, these employees are then paid once a week or once every other week. Hourly employees must receive overtime benefits if they work more than 40 hours each week.
Meaning of Wages:
Wages are the reward paid to the worker for his labor. The term “labor”, as used in Economics, has a broad meaning. It includes the work of all who work for a living, whether this work is physical or mental.
It also includes the exertions of independent professional men and women like doctors, lawyers, musicians and painters who render service for money. In fact, “labor” in Economics means all kind of work for which a reward is paid. Any type of reward for human exertion whether paid by the hour, day, month or year and paid in cash, kind, or both is called wages.
Definition of Wages:
Here are below more definitions defined by different authors.
According to Benham;
“A wage may be defined as the sum of money paid under contract by an employer to the worker for services rendered.”
According to A.H. Hansen;
“Wages is the payment to labor for its assistance to production.”
According to Mc Connell;
‘Wage rate is the price paid for the use of labor.”
According to J.R. Turner;
“A wage is a price, it is the price paid by the employer to the worker on account of labor performed.”
Types of Wages:
Wages typically paid on an hourly, daily or weekly basis. In real practice, wages are of many types as follows:
Piece wages are the wage paid according to the work done by the worker. To calculate the piece wages, the number of units produced by the worker is taken into consideration.
If the laborer is paid for his services according to time, it is called a time wage. For example, if the labor is paid dollar $5 per day, it will be termed as time wage.
Cash wage refers to the wages paid to labor in terms of money. The salary paid to a worker is an instance of cash wages.
Wages in Kind:
When the laborer is paid in terms of goods rather than cash, is called the wage in kind. These types of wage are popular in rural areas.
Under this type, the wage is fixed in the beginning for complete work. For instance, if a contractor is told that he will be paid dollar $5,000 for the construction of the building, it will be termed as contract wage.
Understand the Nominal Wages and Real Wages.
The money paid to a worker as a reward for his work is known as nominal wage. But what is money wanted for? Obviously for the goods and services it can buy. By ‘real wage’, we understand the satisfaction that a laborer gets from spending his money wage in the form of necessaries, comforts, and luxuries. It means the total benefits, whether in cash or kind, that a worker enjoys by working at a certain job.
The following are the two main concepts of wage:
- Nominal Wage.
- Real Wage.
Money Wages or Nominal Wages:
The total amount of money received by the laborer in the process of production is called the money wage or nominal wage. The nominal or money value of wage is expressed at current prices and is not adjusted for the effects of inflation. In contrast, the value of the wage or earning that someone earns each year are expressed at constant prices and therefore have been adjusted to take into account price changes.
Real wage’s mean the translation of money wage’s into real terms or in terms of commodities and services that money can buy. They refer to the advantages of worker’s occupation, i.e. the amount of the necessaries, comforts, and luxuries of life which the worker can command in return for his services. An example will make things clear. Suppose “A” receives Dollar $100 p.m. as money wage’s during the year.
Suppose also that midway through the year the prices of commodities and services, that the worker buys, go up, on the average, by 50%. It means that though the money wage remains the same, the real wage’s (consumption basket in terms of commodities and services) are reduced by 50%. Real wage’s also included extra supplementary benefits along with the money wage.
Understand the Methods of Wage Payment.
From the point of view of payment, wage’s can be classified as:
- Cash wages or wage’s in kind, according to as the payment is made in cash or kind.
- Time wages, when the wage rate is fixed per hour, per day or per month.
- Piece wages, when the worker is paid according to the work done, and.
- Task wages, which is a payment on a contract basis, i.e., payment for finishing a specified job.
Wage’s are given different names, e.g., salaries for the higher staff, pay to the lower staff like clerks and typists, wage’s for the workers, fees for persons in independent professions like lawyers and doctors, commission for middlemen, brokers, etc., and allowance for special work or for special reasons, e.g., traveling allowance, dearness allowance, etc.