Wage Rate

See Also:
How to compensate sales staff
Compensation Plan
Equity Interest
Capital Project
Damage Claim

Wage Rate Definition

The wage rate definition is the rate of compensation for a worker. It is one of the central themes of the study of human resources. It is determined by 2 factors: productivity at work or number of production hours.
This study is known as wage rate economics. It is an important factor to economics because the wages of the average worker form an important factor in both microeconomics and macroeconomics. That is, it effects both buyer behavior and governmental policy.

Wage Rate Explanation

Wage rate, explained as the compensation plan for any employee or set of employees, establishes the cost as well as income of human resources. Explained simply, wage rates are based on the amount produced or the number of hours worked. Sales staff, for example, are given a commission based on the number of sales they make. Conversely, hourly employees are paid a certain amount for each hour they spend at work.
Additional compensation methods exist for employees. Health benefits, medical benefits, bonus’, promotions, and even cafeteria plans amount with the above wages to result in the total wage rate for staff. Fringe benefits, like a company car or free products, are not technically considered part of the wage rate which a worker takes.
Many nations require a minimum amount of income per worker. For wage rate, us government calls this the “minimum wage”. the law requires businesses to pay employees at least this much money in order to continue operations.

Wage Rate Example

Let’s look at the following wage rate example. Hank is a worker at a major oil company. Hank, a father of 5, works to support his family. He must make a certain amount of income every day to make sure that he can provide for the necessities which his family needs.
Derek, on the other hand, works for the same oil company. As a young and successful man, Derek is looking to optimize his benefit. Derek is looking for a compensation plan that grows with his productivity. As a result, Derek is willing to risk something if the gain for success is higher.
Both men are sales staff of the same oil company. Luckily, the company has a “choose-your-own” wage rate determination. They can offer this because of the years of study of their employees and work habits. While one is paid an hourly wage, the other is paid mostly through commissions. This allows each to have the work environment that they want. It proves to be a successful plan: both men achieve the same level of productivity. If meeting with a manager, both men will say that they enjoy their work. It is because of the flexible wage rate decision that each can create the plan that best suits their lifestyle.
In order to determine which candidates are the right fit for your company, download and access your free white paper, 5 Guiding Principles For Recruiting a Star-Quality Team.
 
wage rate, Wage Rate Example, Wage Rate Definition
wage rate, Wage Rate Example, Wage Rate Definition

ARTICLES YOU MIGHT LIKE

PEO or Outsource Payroll

See Also: Advantages of a PEO What is a PEO? How to Select a PEO Professional Employer Organizations FAQ’s Service Department Costs PEO or Outsource Payroll Do you have a PEO or outsource payroll? Under the PEO Arrangement, there is a co-employment relationship in which both the PEO and the Business Owner have an employment

Read More »

Product Life Cycle Stages

See also: Product Life Cycle Company Life Cycle Why You Need a New Pricing Strategy Increasing Pricing on Products What is the Product Life Cycle? A product life cycle includes stages the product experiences throughout its lifetime – from conception of the idea to the decline and abandonment of the product. Some products experience longer

Read More »

Increasing Pricing on Products

Recently, Netflix – streaming service giant – increased their pricing on two of their products by more than 10%. At first, media and customers displayed anger and backlash. But after the pricing increase, many customers remained at the increase was approximately a $1 difference. Plus, you have to factor in that many people are “cutting

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE
Share on facebook
Share on twitter
Share on linkedin

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

June 13th - 16th 2022