Wages

Wages are compensation paid by an employer to an employee in exchange for labor. They are typically expressed as a monetary amount per hour, day, or pay period and may include overtime pay, bonuses, commissions, and other variable components. Wages are distinct from salaries, which are usually fixed periodic payments, though the distinction varies by context. In economic analysis, wages can be measured in nominal terms or in real terms after adjusting for inflation.

Wage levels arise from the interaction of labor supply and demand, but are also influenced by productivity, skill, education, experience, occupation, and geographic location. Institutions such as unions and collective bargaining can raise wages, while minimum wage laws set legal floors. Government policies, tax credits, and social insurance programs affect take‑home pay. In competitive markets, higher productivity or scarcity of skills tends to raise wages; in imperfect markets, wages may diverge from marginal productivity and reflect bargaining power and policy frameworks.

Types and concepts include base wages, piece‑rate pay, and commissions, which may be combined with bonuses or incentives. Real wages reflect purchasing power and can change with inflation. Total compensation encompasses not only cash wages but also benefits such as health insurance, retirement contributions, and other non-monetary rewards.

Wages influence living standards, consumer demand, and the distribution of income. They are central to debates on wage inequality and the gender pay gap. Global differences in wages reflect variations in productivity, institutions, and policy. Wage policy tools, such as minimum wage laws and wage subsidies, are commonly used to influence employment, poverty, and economic equity.