Salary vs Wages

When someone asks your income, if you are in a private or government service, he is obviously referring to your salary. But when we talk about the income of blue collar workers or others who earn daily through their work, we invariably talk in terms of wages. Though wages are income, and salary is also nothing else but income of an individual, there are subtle differences between salary and wages that will be highlighted in this article.

There are people who use the terms salary and wages interchangeably without realizing that the difference between the two terms goes beyond monthly earnings. Wages are mostly associated with hourly compensation, and the employee gets money on the basis of number of hours put in by him multiplied by hourly rates. If there is an electrician in a company who puts in 50 hours of work and has a contract saying he would get an hourly rate of $20, he would get 50×20 = $1000 at the end of the month. The paycheck (paycheque) an employee gets is always based upon actual number of hours put in by the employee.

Salary is a concept that is always either in monthly or annual basis, though it may be paid weekly or fortnightly . When there is salary, you hear about yearly packages, bonuses, incentives and perks based upon performance. You have the CEO’s, directors, government employees and many others who earn their salaries, not wages. Salaried employees are not entitled to any additional income if they put in additional hours of work in a week or month as it is considered to be a part of their job. On the other hand, employees working on the basis of hourly wages get bonus once they put in the agreed number of hours (generally 40 hours) in a week. A salaried employee will not be getting a lower salary in a month if he has put in lesser number of hours as there is no criterion of deciding income on the basis of hours put in. Employee working on hourly wages gets 1.5 times or twice his hourly rates for all hours besides the minimum 40 hours that he is required to put in.

Organizations require huge human activities to achieve their and for the development of the organization. The management of an organization uses the term ‘compensation’ to denote the cost of using the human resources in the organization. There are many types of compensation according to their functions like wages, salaries, incentives, monetary benefits, etc. The compensation policy of an organization depends on various factors like government policies, skills of the employees, job conditions, risks associated with the job, etc. This article concentrates on communicating the differences between Wages and Salaries .

WAGE

‘Wage’ is the term which specifies the compensation paid to the person in return to the job he had done in the organization. The wages are given daily, weekly or fortnightly and the compensation to be paid is determined by considering the hours worked by the person. Wages are paid to the blue-collar workers who involve in technical, manual and more of a physical work.

The government prescribes a certain wage rate to the workers in every industry and the companies must follow the policies of the government in deciding the pay of the workers who are working in their companies. The wage rate is fixed based on the skill of the worker, cost of living in the locality, the scarcity of the workers with required skill, the risks involved in the job, etc.

SALARY

Salary is the term which specifies the compensation paid to the employees of the organization in return for the contribution of an employee towards the organization. Salaries are paid to the white-collar employees, managers, professional, etc. The salaries are paid monthly or annual basis to the employees. The salary is fixed according to the qualifications, the ability of an employee to perform the job, experience, etc.

There are many benefits which the salaried employees enjoy like salary increments, incentives, promotions, bonuses, etc. which will motivate the employee to perform better and helps in developing a sense of belongingness among the employees towards the organization. Some organizations pay huge salaries to their employees to attract highly talented employees to join in their organization and also for retaining the existing talent.

DIFFERENCES TABLE

WAGE	SALARY
The wages are paid to the workers in an organization.	The salaries are paid to the employees in an organization.
GIVEN TO
The wages are given to the people who are involved in manufacturing activities, technical, manual and physical activities.	The salaries are given to the people who are involved in administrative work like office jobs, etc.
PAYMENT TENURE
The wages are paid daily or weekly or fortnightly based on the hours worked.	The salaries are paid monthly or annually based on the performance of an employee.
PAID TO
The wages are the remuneration to the "Blue-Collar" workers.	The salaries are the remuneration to the "White-Collar" workes.
EXTRA PAYMENTS
The wage based workers can get extra payment if they work for additional hours.	The salary based employees cannot get extra payments for extra hours.
PAYMENT RATE
The wage rate is not fixed throughout the period and usually, keeps on changing.	The salary is fixed at the time of joining of an employee and it won"t change unless the employee gets increment.

CONCLUSION

The wage based workers have to work daily to earn money for their livelihood and there is no paid leaves concept for daily wage earners. whereas, the salaried employees can avail paid leaves, sick leaves, perks, etc. which is a huge benefit to the salaried employees. From the above discussion, it is evident that the wages and salaries are different and cater different needs of different people.

The term salary and wages is often confused by people and is used interchangeably. But the truth is that both these terms differ from each other and hold different meanings. Salary is a fixed amount paid or transferred to the employees at regular intervals for their performance and productivity, at the end of the month whereas wages are hourly or daily-based payment given to the labour for the amount of work finished in a day.

The main difference between salary and wages lies in the fact that salary is fixed, i.e. it is predetermined and agreed between the employer and employee, while wages are not fixed, as it varies depending on the performance of the labour. This article presents you the important differences between salary and wages in tabular form.

Content: Salary Vs Wages

Comparison Chart

Basis for Comparison	Salary	Wage
Meaning	A fixed pay that an individual draws for the work done by him on an annual basis.	A variable pay that an individual draws on the basis of hours spent in completing the certain amount of work.
Skills	Skilled personnel	Semi-skilled or unskilled
Type of cost	Fixed	Variable
Rate of payment	Fixed rate	Wage rate
Payment cycle	Monthly	Daily
Basis of payment	Performance basis	Hourly basis
Paid to whom	Employees	Labor
Nature of work	Administrative-office work	Manufacturing-process work
KRA (Key resultant area)	Yes	No
Extra pay for extra hours	No	Yes

Definition of Salary

The term salary is the agreed upon amount of money between the employer and the employee that is extended at regular intervals on the basis of an individual’s performance. Salary is generally a fixed amount of package calculated on an annual basis. When divided by a number of months the amount to be disbursed monthly is ascertained. The same is given to the employee on the basis of his productivity.

An employee is supposed to work for certain fixed hours daily but if Sometimes the work is not finished in time the employee has to devote his extra time without any additional pay. An employee is entitled to leaves, perks, and benefits, i.e. salary will be given if an employee has availed a leave and didn’t turn up for the work.

Salaried persons are generally said to be doing “white collar office jobs” which implies that an individual is well educated, skilled and is employed with some firm and holds a good position in the society.

Definition of Wages

Wage is termed as a compensation that is given on the basis of the amount of work done and the hours spent in doing that. Wages are variable and do vary with day to day functioning of an individual. Wages are given to labours who are engaged in manufacturing processes and get the compensation on a daily basis.

Labour is paid on the basis of hours and in order to increase the pay, extra hours have to be devoted to fetch more.An individual is paid for his presence, not for his absence i.e. in case a person do not come for the work he will not be paid for that day.

The waged person are said to be doing “blue collar labour job” which implies that an individual is engaged in the unskilled or semi-skilled job and is drawing wages on a daily basis.

Key Differences Between Salary and Wages

Following are the major differences between salary and wages:

1. Salary is the fixed amount of compensation which is paid for the performance of an employee. Wage is the variable amount of compensation which is paid on the basis of hours spent in finishing a certain amount of work.
2. Salary is given to the skilled persons who apply their proficiencies in respective fields and generate the revenues for the firm. Whereas wages are paid to the semi-skilled or unskilled worker such as carpenter, welder, electrician, etc. who work on hourly basis.
3. In the case of salary, the cost incurred is fixed i.e. fixed amount is paid monthly. Whereas in wages, the cost is variable, because it can vary with the day to day performance of an individual.
4. Salary once decided, in the beginning, remains fixed throughout. Whereas in wage system, there is a wage rate that keeps on changing and an individual is paid on the basis of prevailing wage rate.
5. Salary is generally paid at fixed intervals i.e. monthly. Whereas wages are paid on a daily basis for the number of hours spent.
6. Salary is paid on the basis of the performance of an individual. Whereas wages are paid on hourly basis i.e. the amount of work done in hours.
7. Salary is paid to employees who possess the skills and efficiencies in completing the office work. Whereas wages are paid to the labours, who are engaged in manufacturing processes and do the work on an hourly basis.
8. Salary is given to those who are engaged in administrative or office work job. Whereas wages are paid to those, who are engaged in manufacturing processes that require unskilled or semi-skilled workers.
9. A salaried person usually has KRA i.e. key resultant area set for the month on the basis of which their performance is judged. Whereas the waged person does not have any KRA and is judged on the basis of hourly work done.
10. Salaried persons are not paid additional compensation for any extra hours. Whereas wage holder does get an additional pay for the extra hours devoted by him.

Conclusion

It can be easily concluded from the above comparison that salary is a fixed amount of money paid at a regular intervals to an individual for the work done by him in given period of time whereas wage is a variable pay given to an individual for the number of hours spent by him in completing a certain amount of work.

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Updated on February 24, 2018

The terms salary and wage are often used interchangeably. Having almost the same meaning, this can be confusing at times. Moreover, employment laws do not provide specific definitions for either. While interchangeable usage of both terms may be accepted in some locations or businesses, they actually have their own meaning and are considered grammatically wrong if used improperly.

Definitions

A graph showing the real median household salary in the United States in 2014

Salary is a periodic payment to an employee as a compensation for his/her performance regardless of the hours worked. It is usually a fixed amount of money paid in fixed intervals (e.g. 15 th day pay, monthly payments, or in some cases, weekly payments). The fixed amount is generally a fraction of an employee’s annual pay. The said payment is usually specified in an employment contract.

Having a fixed amount of payment annually, a salary has its own drawbacks. Overtime is usually ignored and will not be compensated, regardless of how many hours are worked. Also, once salary is decided, it remains fixed throughout (unless of course the employee is given a raise or promotion).

Salary may have its own drawbacks, but it does come with its perks as well. Salary is also known to be a package, which means that employees do not only receive money as payment, but also other compensations like medical insurance, retirement fee, paid leave/vacations, educational plan, and other benefits.

Salary is usually determined through comparison of market pay rates, leveling the pay rates and salary that was established by the employer, the skill of the employee, or even the availability of people that can perform the specified job.

Wage

The minimum wages of developed economies in $/hour in 2013

In contrast to salary, a wage is generally a monetary compensation paid by an employer to an employee in regards of his/her hours worked. Instead of a compensation quoted on an annual basis, the amount paid will be based on the number of hours worked multiplied by the employee’s hourly rate. Paychecks are also received sooner than a salary, most likely a few days after the work period or when the job is done.

As with the salary, a wage does have its downside. If you leave work, you won’t get paid regardless of your reason. If you’re sick or pregnant and can’t get to work, you won’t be paid. It means you strictly have to be present and working in order to get paid. You won’t get any paid vacations, paid sick leaves etc.

A wage may seem undesirable at this moment, but it also does have its advantages. Unlike the salary, overtime is compensated. If you work 50 hours in a week, you will receive the full 50 hours multiplied with your rate as payment. For some, the first 40 hours would be paid at your regular rate, and the excess hours would be 1.5 times your normal rate. This opportunity is usually not given to salary earners.

A wage is usually determined by the skill of the employee, availability of people that can perform the specified job, or through comparison of market pay rates.

Salary vs Wage

What’s the difference between a salary and wage? They may both pertain to the compensation for a job done, but they do differ in everything else.

Historically, manual labor jobs meant earning wages, while professional jobs meant having salaried positions. Today, they have their own meanings. Wage earners work at an hourly rate, and salary earners work at a fixed rate. Their payment cycle also differs as a salary is usually paid monthly, while a wage is usually paid soon after the work is done. If you are a salary earner, you can be considered lucky as salary earners have other benefits like insurance, paid leaves and the like. Wage earners don’t get to have these benefits but what they do get is paid overtime. They can work more than 30 or 40 hours per week and the extra hours will still be compensated. Lastly, a salary has a fixed rate, while a wage has changing rates, mostly through current market pay rates.

Comparison Chart

	Wage
A fixed pay on an annual basis	A variable pay on an hourly basis
Payment cycle can go from 15 th day, monthly, or weekly	Payment cycle is within a few days after the job is done
No extra pay for extra hours	Has extra pay for extra hours
Has benefits like paid leaves, medical insurance etc. (depending on the contract)	No benefits but can receive bonuses (depending on the employer)

В сфере бизнеса все разговоры ведутся о деньгах, а точнее об их получении. Деньги можно получать разными способами. Сегодня мы рассмотрим слова, которые относятся к получению денег и которые очень легко спутать: salary, wages, earnings, income, revenue и другие. Читайте и запоминайте, чтобы не делать ошибок.

Salary ["sæl(ə)rɪ] - оклад, жалование, заработная плата, которая ежемесячно переводится на счет в банке согласно контракту. Этот тип заработной платы характерен для офисных работников. Salary не зависит от объема выполненной работы и количества отработанных часов:

He receives a modest salary so he wants to ask his boss for raising salary. - Он получает скромную зарплату и хочет поговорить с начальником по поводу повышения жалования.

You negotiate your salary with the boss. - Тебе следует обсудить твой оклад с начальником.

Wages [ˈweɪ·dʒəz] - заработная плата, которая выплачивается наемным работникам наличными еженедельно либо ежедневно. Такой тип зарплаты получают рабочие, которые занимаются физическим трудом, строители. Wages зависит от объема выполненной работы и количества отработанного времени:

Earnings ["ɜːnɪŋz] - заработок, фактически заработанные деньги за определенный период. Если вы работаете на двух работах, то сумма ваших зарплат - это ваш заработок. По отношению к предприятию или фирме earnings - прибыль, чистый доход от деятельности (выручка минус затраты):

Every month she counts her earnings. - Ежемесячно она подсчитывает свой зароботок.

I found one more part-time job so my earnings will rise. - Я нашла еще одну работу на полставки, поэтому мой заработок возрастет.

Income ["ɪŋkʌm] - доход, все деньги которые вы получаете. Income бывает двух видов: earned income и unearned income .

Earned income - заработанный или трудовой доход, ваша заработная плата, которую вы получаете за свою работу (salary и wages ). Unearned income (или passive income ) - непроизводственный доход. Это доходы от дивидендов, вложений, ценных бумаг:

Revenue ["rev(ə)njuː] - доход, выручка компании. По отношению к отдельным людям это слово не используется и подразумевает существенную сумму. Кроме того, revenue - это государственный доход, т.е налоговый доход, который государство получает после сбора налогов:

The revenue of our company has increased by 10% this year. - Выручка нашей компании увеличилась на 10 % в этом году.

The government is planning to raise revenue by introducing new taxes. - Правительство планирует увеличить доходы бюджета путем введения новых налогов.

Profits [ˈprɒfɪts] - прибыль, доход, нажива. Profit - разница между деньгами, затраченными на покупку либо производство чего-либо и выручкой после его продажи:

My business brings me profit. - Мой бизнес приносит мне некоторый доход.

We sold our car at a profit. - Мы выгодно продали старую машину.

Fee - вознаграждение, гонорар, плата за услуги юриста, доктора, массажиста и других специалистов:

Dentist charges a reasonable fee for his quality of work. - Этот стоматолог запрашивает умеренную плату за свои качественные услуги.

She couldn’t pay lawyer’s fee. - Она не могла оплатить услуги адвоката.

Fringe benefits - льготы, дополнительные преимущества, привилегии, такие как служебный автомобиль, питание, медицинская страховка. В этом значении часто употребляют слово perks - сокращенно от perquisites [ˈpɜːkwɪzɪts]:

The salary isn’t high but there are some fringe benefits company car and free meals. - Оклад не очень большой, но есть некоторые дополнительные преимущества, такие как служебный автомобиль и питание.

Do the perks include private health insurance? - Льготы включают медицинскую страховку?

Remuneration - вознаграждение за выполненную работу, оплата, компенсация. Может выражаться не только в виде денег, но и других благ:

Don’t expect high remuneration for the work done anyhow. - Не ожидайте высокого вознаграждения, если работа выполнена кое-как.

I was pleased with the remuneration they paid me for my work. - Я был доволен вознаграждением, которое они мне выплатили за мою работу.

Pay - оплата, выплата, плата, уплата, жалованье, заработная плата:

When will you draw your pay? - Когда ты получишь свою оплату?

He worked late hours and got his overtime pay. - Он работал допоздна и получил плату за сверхурочную работу.

Emoluments [ɪˈmɒljʊmənts] - заработок, вознаграждение, жалованье, заработная плата. Формальный эквивалент salary, fee:

The managers our company get adequate emoluments. - Менеджеры в нашей компании получают адекватное жалование за свою работу.

Your emoluments include your salary and certain benefits provided by the company. - Ваше вознаграждение включает вашу ежемесячную зарплату и определенные льготы, которые обеспечивает компания.

Stipend ["staɪpend] - жалованье, выплачиваемое церковнослужителям, учителям, государственным чиновникам:

School teachers live on a modest stipend. - Школьные учителя живут на скромное жалование.

Do the public official get their stipend on time? - Государственные чиновники получают свое жалование вовремя?

Pension ["pen(t)ʃ(ə)n] - пенсия, пособие:

After the accident, he receives a disability pension. - После аварии он получает пенсию по инвалидности.

When people retire, they are granted a pension. - Когда люди уходят на пенсию, они получают пенсионное пособие.

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