What is the Difference Between Wages and Salary

The main difference between wages and salary is that wages are money paid on an hourly, daily or weekly basis while salary is a fixed amount, usually paid monthly or fortnightly.

Both wages and salary refer to remuneration paid to employees for work performed. Although these two terms are often used interchangeably, they have two distinct meanings. Employers calculate wages according to the number of hours employees work, but the salary is a flat payment and does not involve the number of hours worked.

Key Areas Covered

1. What are Wages 
     – Definition, Features, Pros and Cons
2. What is a Salary
     – Definition, Features, Pros and Cons 
3. What is the Difference Between Wages and Salary
     – Comparison of Key Differences

Key Terms

Employees, Salary, Wage

What are Wages

Wages basically refer to money paid on an hourly, daily or a weekly basis. Wages vary depending on hours worked and worker’s performance. In other words, a wage earner receives a payment that is based on the number of hours worked multiplied by the hourly rate of pay. For example, a factory worker works for 40 hours in a week, and if his hourly rate is $20, he will weekly receive a payment of $800. If the worker had only worked for 30 hours, he would receive a weekly payment of $600. Moreover, it’s unskilled or semi-skilled workers that usually earn wages. These workers generally have fewer responsibilities and work benefits than white-collar workers. 

Pros and Cons of Wages

Pros

• Not contract-bound (allows a worker to change employment easily if he/she finds a better-paid position.
• Less responsibility
• Immediate pay
• Ability to work more hours per day and earn extra

Cons

• If they are absent, even for medical reasons, there is no payment
• Have to work extra hours to earn extra
• Usually no employee benefits

What is a Salary

Salary is a fixed regular payment, typically paid on a monthly or basis. However, the salary is generally expressed as an annual sum. For example, if an employee receives a monthly salary of $5000, annually, he earns $60000. Salary-earners receive their salary at a fixed interval, usually monthly or fortnightly.

Pros and Cons

Pros

• Payment is consistent
• Entitled for number of paid days for a year
• Workers who receive salaries usually have better positions and earn more than wage-earners

Cons

• May be difficult to determine overtime
• Leaving the position may be difficult as workers have a contract

Difference Between Wages and Salary

Definition

Wages refer to money paid on an hourly, daily or a weekly basis while salary refers to a fixed regular payment, typically paid on a monthly basis.

Number of Hours

Wages are calculated using the number of hours worked while salary is not calculated using the number of hours worked.

Absent Days

If a wage-earner does not work, he won’t receive payment for that day, but a salary-earner doesn’t fact this problem.

Type of Workers

Wages are usually earned by unskilled or semi-skilled workers while salaries are earned by office workers or management.

Position and Responsibility

Wage-earners usually have lower positions and fewer responsibilities than those who earn a salary.

Employee Benefits

When compared to wage earners, salary earners have many employee benefits like bonuses and paid leave.

Conclusion

Both wages and salary refer to remuneration paid to employees for work performed. The main difference between wages and salary is that wages are money paid on an hourly, daily or weekly basis while salary is a fixed amount, usually paid monthly.

Reference:

1. Doyle, Alison. “What Is a Salary Employee?” The Balance Careers, 4 May 2020, Available here.
2. “Wages and Salaries.” Wikipedia, Wikimedia Foundation, 11 Dec. 2019, Available here.

Image Courtesy:

1. “Woman, adult, people, money, law of attraction, happy, earning power, women, wages, investing” (CC0) via Pikist
2. “678558” (CC0) via Pxhere