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A wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an employer to an employee in exchange for work done. Payment may be calculated as a fixed amount for each task completed (a task wage or piece rate), or at an hourly or daily rate (wage labour), or based on an easily measured quantity of work done.

Wages are part of the expenses that are involved in running a business.

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 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 paid directly by clients and employee benefits which are non-monetary forms of compensation. Since wage labour is the predominant form of work, the term "wage" sometimes refers to all forms (or all monetary forms) of employee compensation.

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  • ✪ Labor Markets and Minimum Wage: Crash Course Economics #28
  • ✪ Who Does a $15 Minimum Wage Help?
  • ✪ Is Raising Minimum Wage A Bad Idea?
  • ✪ Harga Sapi BAKALAN Kemarin TANGGAL 10 MARET 2019 PASAR SAPI WAGE
  • ✪ Harga Sapi Bakalan 10 Maret 2019 Pasar Sapi Minggu Wage Pati


Adriene: Welcome to Crash Course Economics, I’m Adriene Hill, Jacob: and I’m Jacob Clifford, and today we’re going to talk about labor markets, a pretty important topic. Adriene: Unless you're independently wealthy, or fine with living in your parents basement, you probably need to get a job. But how do you even get a job? And what kind of job should you get? In a lot of ways, it comes down to supplying a skill that someone else demands. [Theme Music] This is Cristiano Ronaldo. He makes about $20 million a year playing soccer. Or football, depending on where you live. Pretty much everybody would agree no one NEEDS that kind of money, but does he deserve it? How do his employers, the Real Madrid Football Club, justify this huge salary? Admittedly, the market for professional athletes is complex, but on some level, it’s supply and demand. The supply of people that have the skills to be world class soccer players is low. And the demand for world class soccer players is incredibly high. Ronaldo might be willing to play for only 10 million dollars a year; it’s a lot of money. He might even play for 5 million. And if he really truly loved the beautiful game, he might do it for free. So why is he getting 20 million dollars? This goes back to that really high demand. Having a superstar on your team generates millions in ticket and merchandise sales. It might help you win some of the many cups up for grabs in international football. So Real Madrid thought Ronaldo and his double scissor move, were worth 20 million dollars, and Ronaldo agreed, so they have a contract. These same ideas explain how wages are determined in nearly every labor market. Let’s go the Thought Bubble. Jacob: Usually when Stan goes to the mall he's the buyer. He demands sunglasses and giant pretzels and the businesses supply them. But if he wants a job at the mall’s pretzel shop, the roles are reversed. Since he supplies labor, he is now the seller and the pretzel shop owner becomes the buyer. A buyer of labor. Now, that’s when wage negotiation ensues. Stan could insist on a wage of $25 an hour for his pretzel skills, but the owner would point out that they could easily hire other people for much less. The owner could offer Stan a wage of only $1 per hour, but Stan would point out that he could easily get paid more at the Froyo shop. In the end, they agree on a wage that makes each of them better off. The owner gets some help around the store and Stan earns money so he can buy even cooler sunglasses. Economists call this voluntary exchange. The supply of labor depends on the number of people that are qualified to do the job. Stan would love to get paid more, but since warming up pretzels doesn’t require extensive skills, the supply of capable workers is high and consequently the wage is relatively low. But that doesn’t mean that Stan is going to work for peanuts. The wage offered has to cover his opportunity cost -- -- the value of his lost free time and the money he could be making doing something else. The demand for labor depends on the demand for the products a business sells. Economists call this derived demand. If pretzel demand is booming, then the store owners are going to want more pretzel makers. If other stores also need more employees, demand for workers will increase and drive up wages. Thanks Thought Bubble. Supply and demand explains why wages are different for different professions. Engineers are in high demand because they produce the products that many consumers want and their supply is limited because the training for these jobs is pretty difficult. Social workers and historians, aren’t paid as much, even though their work is important because demand is relatively low and supply is relatively high. It’s not rocket science. Adriene: Supply and demand explain a lot, but there are several reasons why wages in a labor market don’t end up at a competitive equilibrium. Sometimes workers get paid less not because they have different skill levels, but because of their race, ethnic origin, sex, age, or other characteristics. This is called wage discrimination. Wages might also be unfairly low when a labor market is a monopsony -- when there is only one company hiring and workers are relatively immobile. When you’re the only employer, workers have to take what you offer, or they’re out of luck. Take the NCAA, the organization that regulates college athletics in the US. Many economists point out that high profile college athletes are generating millions of dollars for their schools, but they’re forced to accept a very low “wage” of a scholarship with free tuition. Now sure, baseball and hockey players can skip straight to the pros, but the NFL prohibits drafting football players until three years after high school. And NBA teams can’t draft basketball players until they’re 19. There are some situations where wages might actually be higher than market equilibrium. For example, some employers might voluntarily offer higher than normal wages to increase worker productivity and retention. Economists call this efficiency wages. Henry Ford doubled the wages of assembly line workers in 1914 to keep them from seeking jobs elsewhere. And this still goes on today. You may not be completely happy with your job, but if it offers way more than what everyone else is paying, you're less likely to quit. Unions can also drive up wages. A union is an organization that advances the collective interest of employees and strives to improve working conditions and increase wages. They do this through collective bargaining. Representatives for the workers negotiate with employers and if their demands aren’t met, workers go on strike, and stop production altogether. Although unions were once very strong in the US, union membership and their strength has declined since the 1950s. At their height, approximately 1 in 3 American workers were in a labor union. These days it's more like 1 in 9, and the largest unions represent workers in the public sector, like teachers and firefighters. Wages might also not be at equilibrium when there is a minimum wage -- basically a price floor that prevents employers from paying workers below a specific amount. Technically, in the US, minimum wage affects less than 3% of workers. But the Brookings Institution estimates that an increase in the minimum wage likely wouldn’t just impact that small slice of the labor market. It would also drive up the wages of people who make just above the minimum wage. According to Brookings, that ripple effect could raise the wages of nearly 30% of the workforce. The debate over whether or not there should be a minimum wage, and how high that minimum wage should be, gets pretty heated pretty fast. Some classical economists argue against nearly all forms of government manipulation in competitive markets. They say the minimum wage not only leads to unemployment, but it actually hurts the people it claims to help. Their logic goes something like this: A minimum wage deters employers from hiring unskilled workers, hiring only skilled or semi-skilled workers instead. These economists argue that minimum wage does little or nothing to alleviate poverty, since instead of earning a minimum wage, unskilled workers end up earning no wage at all. The economists that support a minimum wage argue that real life labor markets aren’t as competitive or transparent as classical economists suggest. They believe that employers have the upper hand when it comes to negotiating wages and that individual workers lack bargaining power. I’m not going to tell you what to think, but think about it like this: if a grocery store wasn’t required to pay $7.25 an hour, and the grocery store was the only place hiring, they could likely squeeze individual employees to accepting lower than market value. In this interpretation, minimum wage isn’t interfering with competitive markets, as much as it’s correcting a market failure. Remember anti-trust laws that prevent powerful monopolies from charging higher prices? Economists that support minimum wage laws say they prevent employers from using their power to exploit workers. The economists who are entirely opposed to minimum wage laws are losing the policy battle. Most countries around the world have minimum wage laws, and many of those countries without them have de facto minimum wages, set by collective bargaining agreements. But even among economists who support some sort of minimum wage, there’s disagreement over how high that minimum wage should be, and what raising the minimum wage might do to the economy. Consider the U.S.: the current federal minimum wage is $7.25 an hour. In 2014, 600 economists, including 7 Nobel Prize winners signed a letter arguing that the minimum wage should be increased to $10.10 an hour. They argued that raising the minimum wage could have a small benefit to the economy. Workers, with their newly increased wages, would spend more. This would increase demand, and perhaps help stimulate employment. But some of those same economists balked when it came to the question of raising the minimum wage to fifteen dollars an hour. They argue that even if a fifteen dollar an hour minimum wage might make sense in an expensive city, like Los Angeles or New York, where the median income is relatively high, it could have a significant negative effect on employment in a city or town where incomes are lower. If economics was a pure science, we could just test these ideas under controlled circumstances. We could have one state set a significantly higher minimum wage than its neighbor and see what happens. It turns out that happened in 1992, and economists David Card and Alan Krueger studied it. New Jersey raised its minimum wage from $4.25 to $5.05 while Pennsylvania kept theirs at $4.25. The economists surveyed large fast food chains along the state’s shared border and found that workers didn’t get fired, in fact, employment in New Jersey actually increased. But it’s far from settled. There have also been studies that indicate raising the minimum wage DOES increase unemployment. A relatively recent survey of economists, by the University of Chicago, found that a small majority think raising the minimum wage to nine dollars an hour would make it noticeably harder for poor people to get work. But, and this is where it gets interesting, a slim majority also thought the increase would be worthwhile, because the benefits to people who could find jobs at nine dollars an hour would outweigh the negative effect on overall employment. Jacob: Very few economists argue a higher minimum wage will end poverty, but some argue that it could reduce poverty. The minimum wage doesn’t exist in vacuum. Policies that fight poverty should also focus on providing education and skills. Adriene: Those skills are what the labor market values. It’s those skills that are in short supply and high demand, and will command higher wages. So, while you’re waiting for economists to figure all this out, you might want to learn a new skill. Practice your double scissor, and maybe take Ronaldo’s job. Jacob: Thanks for watching Crash Course Economics, which is made with the help of all these awesome people. You can help keep Crash Course free for everyone forever by supporting the show at Patreon. Patreon is a voluntary subscription service where you can help support the show by giving a monthly contribution. Thanks for watching! DFTBA!


Origins and necessary components

Wage labour involves the exchange of money for time spent at work (the latter quantity is termed labor power by Marx and subsequent economists). 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.[1]

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). The earliest such unit of time, still frequently used, is the day of work. The invention of clocks coincided with the elaborating of subdivisions of time for work, of which the hour became the most common, underlying the concept of an hourly wage.[2][3]

Wages were paid in the Middle Kingdom of ancient Egypt,[4] ancient Greece,[5] and ancient Rome.[5]

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), legislation, and tradition. Market forces are perhaps more dominant in the United States, while tradition, social structure and seniority, perhaps play a greater role in Japan.[6][citation needed]

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.[7] Similarly, white men made about 84% the wage of Asian men, and black men 64%.[8] These are overall averages and are not adjusted for the type, amount, and quality of work done.

Wages in the United States

Historical graph of real wages in the US from 1964 to 2005.
Historical graph of real wages in the US from 1964 to 2005.

Seventy-five million workers earned hourly wages in the United States in 2012, making up 59% of employees.[9] In the United States, wages for most workers are set by market forces, or else by collective bargaining, where a labor union negotiates on the workers' behalf. The Fair Labor Standards Act 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 rates that are higher than the federal level. For certain federal or state government contacts, employers must pay the so-called prevailing wage 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 laws require. The minimum wage rate is there to protect the well being of the working class.[10]


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:

"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 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 for his employer," the definition goes on to list 23 exclusions that must also be applied.[11]

See also

Political science:


  1. ^ Finley, Moses I. (1973). The ancient economy. Berkeley: University of California Press. p. 65. ISBN 9780520024366.
  2. ^ Thompson, E. P. (1967). "Time, Work-Discipline, and Industrial Capitalism". Past and Present. 38: 56–97. doi:10.1093/past/38.1.56. JSTOR 649749.
  3. ^ Dohrn-van Rossum, Gerhard,, (1996). History of the hour: Clocks and modern temporal orders. Thomas Dunlap (trans.). Chicago: University of Chicago Press. ISBN 9780226155104.
  4. ^ Ezzamel, Mahmoud (July 2004). "Work Organization in the Middle Kingdom, Ancient Egypt". Organization. 11 (4): 497–537. doi:10.1177/1350508404044060. ISSN 1350-5084. Retrieved 2014-02-13.
  5. ^ a b Finley, Moses I. (1973). The ancient economy. Berkeley: University of California Press. ISBN 9780520024366.
  6. ^ "Student Login". Edgenuity. – Education 2020 Homeschool console, Vocabulary Assignment, definition entry for "wage rate" (may require login to view)
  7. ^ Magnusson, Charlotta. "Why Is There A Gender Wage Gap According To Occupational Prestige?." Acta Sociologica (Sage Publications, Ltd.) 53.2 (2010): 99-117. Academic Search Complete. Web. 26 Feb. 2015.
  8. ^ U.S. Bureau of Labor Statistics. "Earnings of Women and Men by Race and Ethnicity, 2007" Accessed June 29, 2012
  9. ^ "Employees" as a category excludes all those who are self-employed, and this statistics only considers workers over the age of 16. U.S. Department of Labor. Bureau of Labor Statistics (2013-02-26), Characteristics of Minimum Wage Workers: 2012
  10. ^ Tennant, Michael. "Minimum Wage The Ups & Downs." New American (08856540) 30.12 (2014): 10-16. Academic Search Complete. Web. 26 Feb. 2015.
  11. ^ USC 26 § 3401(a)

Further reading

  • Galbraith, James Kenneth. Created Unequal: the Crisis in American Pay, in series, Twentieth Century Fund Book[s]. New York: Free Press, 1998. ISBN 0-684-84988-7

External links

This page was last edited on 23 May 2019, at 01:58
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