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What is a Wage?

Tricia Christensen
By
Updated May 16, 2024
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A wage is a specified amount of money paid to an employee measured by the amount of time they work. If you make $10 US Dollars (USD) an hour, your wage is $10 USD per hour. You can also consider this by hours worked in a week. An employee working 40 hours a week has $400 USD in weekly wages. The wages you earn are usually calculated prior to any deductions for taxes, insurance payments or other, and represent your gross income. A more reasonable assessment of what you make is your net income, which calculates the money you actually bring home.

Wages are different than a salary, though sometimes people use the terms interchangeably. Usually, people who earn salaries earn a specified amount of money per month, not based on the hours they work. They may still work at least 40 hours a week, but may be required to work more when necessary. Salary doesn’t rise or fall depending on time at work; wages do. If you’re a wage earner who takes a day off without vacation pay, the money you make in a month will be lower. Alternately, if you work more than 40 hours in a week, you may make more money in a month, and you can be paid extra overtime compensation.

Some people who work do not earn a wage or a salary, but have their pay based on commission alone. A person who sells real estate might make no money one month, and tons the next, depending on what the real estate market is like and also upon the skills of the salesperson. Some people make a draw or base pay plus commission, or a base pay plus tips.

Servers at restaurants make the latter. They are paid the city or state minimum for their work, but the majority of their money comes from making tips. These tips are part of overall pay, but are not a wage. They do need to be claimed as income but they’re not a dependable source of income and vary by the number of customers you serve, your skill as a server, and the generosity of the customers.

Many countries, states and cities have requirements for minimum hourly pay, and there is considerable concern about providing a “living wage” for employees. In larger cities, it can be very difficult to truly live on the bare minimum a company must pay you, and may be impossible to support others like dependents on low hourly wages. There have been several attempts in the US to develop a federal living wage requirement but this proves challenging. A living wage in New York City or Los Angeles would have to be much higher than one in other parts of the country where living expenses are lower.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By anon11144 — On Apr 09, 2008

does the wage garnishment have to be court order before the garnishment can be done?

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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