Wages are financial considerations given out to employees as payment for their time and effort of labor. Wages also refers to the compensation given to workers paid by the hour, whereas salary is the word used to describe compensation given out to employees. Compensation, like wages, proves to be monetary payments that employers give out to employees in exchange for their services that they provide the employer or company.
Wages can be determined by supply and demand market forces in capitalist economies. In other countries, wages can be impacted by different elements like the social structure, tradition, and seniority, as they are heavily in Japan. A number of nations have chosen to set up a minimum wage that ensures that a floor on the value of particular types of labor is maintained.
The word wage is a derivation of words that meant to make a promise in the form of money. The medieval French word Wagier stood for pledging or promising, specifically in the situation of a bet. The word Wadium from the Latin of the late period refers to a pledge being given.
Within the U.S., the majority of employees and hourly workers’ wages are determined by either the interaction of market forces or collective bargaining. Labor unions actually negotiate the wages of their members in such collective bargaining. The U.S. also has its Fair Labor Standards Act that creates a minimum wage in Federal law that all states have to observe. Besides this national minimum, many cities and fourteen different states have established their own minimum wages which are greater than the national minimum. With some state government and federal government contracts, a prevailing wage exists that employers have to observe. This is mandated by the Davis Bacon Act or similar legislation within a given state.
Some activists are not satisfied with these wage levels. They have pursued the concept of getting a living wage rate passed. These types of wages would be based on the costs of living and other needed items, causing a living wage rate to be significantly greater than the presently established minimum wages actually are.
Wages are reported to the IRS and employees with W-2 forms sent out by employers. Employees must also state their wages accurately on their tax returns each year. Wages are the starting point for figuring out the amount of taxes that you owe the Internal Revenue Service every year. Wages are reduced by the allowable deductions before an adjusted income is derived for taxing purposes.