Understanding Wages And Salaries
When considering minimum wage standards and the various effects of minimum wage, it is first important to understand what wages are, how they function, and how they differ from salaries. Employment wages are not always identical to living wages. The term living wage refers to the minimum wages that are necessary for an individual to support him/herself and acquire basic necessities. A living wage will vary depending upon where an individual resides. If an individual lives in an expensive city or suburb, hourly wages that are set to meet federal minimum wage standards will most likely not be an adequate living wage. This means that, in many locations, minimum wages do not provide employees with the financial funds necessary to purchase necessities, including food, clothes, housing, transportation, medical care, etc. When a living wage exceeds the wages that an individual is earning, it can be very difficult for him/her to support him/herself. When an individual is earning wages, he/she is being paid on an hourly basis. For every hour that he/she works, he/she is guaranteed a specified amount of money. Salaries work differently. Generally, when an individual earns a salary, he/she will be promised a specific amount of money every week, which, when totaled, will provide him/her with an agreed upon annual salary. There are some benefits and disadvantages associated with both of these payment methods. If an individual is earning hourly wages and becomes ill, he/she is not compensated for the time that he/she is not able to work. However, he/she must be paid overtime if overtime is necessary. If an individual earns a salary, he/she will not be compensated for any extra hours that are worked to complete necessary tasks. If he/she finishes her work early, he/she will receive the same salary as if he/she worked the additional hours.
