Wage vs. Salary: Definitions, Differences and Examples

By Indeed Editorial Team

Updated 15 November 2022

Published 27 July 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Depending on your position and the company you work for, your employer may structure your compensation in different ways. Some employees receive compensation hourly in the form of wages, while others receive a fixed salary. If you're beginning a new role or career, you may want to know the difference between these 2 terms, and if one is better than the other. In this article, we explore what wages are, what salaries are, the differences between the two, and discuss tips for increasing your earnings.

Differences between wages and salaries

These are some key differences between wages and salaries:

Related:

  • What Is Basic Salary? (With Overview and Calculation)

  • What Is a Stipend? (Types, Advantages and Limitations)

Consistency

Because employers structure wages differently than salaries, pay consistency can vary. When you earn wages, you receive compensation directly for the time that you work. This means that your payments may fluctuate based on the number of hours you work.

As a salaried worker, though, you receive the same pay regardless of how much you work. This can be both a pro and a con. Team members who earn wages can choose to work more to increase their pay cheque, while salaried employees cannot. However, a waged worker's pay would be cut if they were to miss work for whatever reason, whilst a salaried employee's pay cheque stays consistent.

Paid time off

Another difference between those who earn wages and those who earn salaries is their paid time off. Most of the time, employees who earn wages don't receive paid time off. Paid leave, along with other benefits like insurance and perks, are more common for staff members who receive salaries. This might make the overall package for a salaried employee more appealing than for those who earn wages.

Work responsibility

Salaried and waged employees also have different work responsibilities. Those who earn wages are usually lower-skilled, resulting in fewer complex responsibilities. For example, a custodian's responsibilities (cleaning the floor and washing the windows) aren't as complex as those of an accountant.

Related: How To Demonstrate a Strong Work Ethic To Your Employer

Overtime pay

Overtime pay is another difference between waged and salaried workers. Waged workers are more likely to receive overtime pay when they exceed the required number of hours of work. This is not usually true for those who earn salaries.

Availability

Salaried employees carry more responsibility for responding to work requests during their time off than those who earn wages. For example, a wage earner can go home at the end of their shift, and they may not return until their next scheduled work time. A salaried employee, however, may return to the office to assist with a project or finish a task before deadlines to ensure success within their workplace.

Earnings

Though not true in every case, the total annual earnings of those who earn wages and those who earn a salary can differ. Usually, salaried employees earn more than those who earn wages, as their jobs typically require a higher level of skill or education. Though salaried employees may usually earn more, a staff member who earns wages and works many hours of overtime can greatly increase their earnings.

Related: What Is Net Salary: Definition and Guide To Calculating Net Salary

What are wages?

Wage is a term that's usually associated with an hourly workforce. Waged workers typically receive a pay packet that's based on the number of hours they worked the week before.

However, companies can also transform a salary into an hourly wage. For instance, a manufacturing firm that has a budget of $45,000 per year for welders would do some simple math and break that number into an hourly rate. Since there are 52 weeks in a year and the welders would be expected to work 40 hours a week, this is how that equation would look like:

Example: $45,000 divided by 52 = 865.38 divided by 40 = $21.63 per hour

Related: Top 10 Accounting Skills To Include in Your Resume

What is a salary?

A salary is an annual amount agreed upon between a company and an employee and paid to the employee in increments, for work performed in a specific role. Salaries can be paid monthly, bi-monthly, bi-weekly or weekly. The salary for an executive manager might be $180,000 per year. If that salary is paid bi-monthly, on the 1st and 15th of each month, you can calculate that by dividing the total salary by the number of payments made in a year to determine the amount on each pay cheque.

Example: $180,000 divided by 24 pay periods = $7,500 per pay period

A salary is a fixed rate, so it doesn't vary from pay cheque to pay cheque.

Related: How To Negotiate a Salary (With Examples)

Tips for increasing your earnings

You can use some of these tips to increase your earnings, whether you earn wages or a salary:

  • Document your contributions: when you're trying to increase your earnings, it's important to track how you contribute to your team, so you can refer to these things when discussing a raise with your supervisor.

  • Meet with your supervisor: communicating with your supervisor about increasing your earnings is important. It may allow you to gain insight into what you can do to increase your earnings or receive a raise directly through a meeting.

  • Pursue higher education: depending on your position and industry, pursuing more certifications or degrees may increase your value and thus increase your wages or salary.

  • Improve your skills and abilities: learning new skills may help you contribute more to the workplace and increase your earnings.

  • Understand your worth: better understanding of standard pay in your field can help you negotiate for a higher salary or better wages.

Related: How To Build Education Section In Your Resume

FAQs about wages and salaries

Here are some answers to frequently asked questions about wages and salaries:

Are they the same thing?

Though wages and salaries are both methods of compensating employees, they are not the same. When you earn wages, you receive compensation directly for the time that you work. This means that your payments may fluctuate based on the number of hours you work. As a salaried worker, though, you receive the same pay regardless of how much you work.

Which is better, receiving a wage or a salary?

There are benefits and drawbacks to both wages and salaries. However, those who earn a salary typically have better access to benefits and receive their compensation more consistently than those who earn wages.

Related: Interview Question: 'What Is Your Expected Salary?'

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