It is a common phenomenon and practice that many people use the word salary and wage interchangeably nowadays. However there is a difference between the two. In this article we will see the difference between the two terminologies. To make our readers understand we will be giving some examples as well. These examples will be very simple and easily understandable.
As far as wage is concerned, it is actually the compensation of the employee which is based on exact number of hours worked by the employee multiplied by an hourly rate of pay. The phenomenon can be best understood by an example. Suppose an employee is working in a factory for 40 hours in a week.
Suppose the employee's rate of pay per hour is $15. The wage will be simply calculated by multiplying the pay per hour with hours worked which in this case is $15*40= $600. Similarly if the employee works for just 20 hours in a week then we will multiply the pay per hours with 20. In the case of wages the pay check has to be computed on the basis of the hours worked which means that the employee who has earned the wage will receive his check after 5 days of work period.
On the other hand the basis of the salary is on compensation of the employee which is quoted on an annual basis. This again can be understood through an example. Let's suppose an employee of a company earns $120,000 on an annual basis. If the employee is paid salary on a semimonthly basis then in such a scenario his payment check will $5000 as his gross salary. The salary is the most common method used for compensation especially in the case of large companies.
The concept of wages is mostly in factories nowadays, modern day companies usually prefer salary for their employees and this phenomenon is widely seen nowadays. However in a nutshell both of these compensation methods i: e salary and wages are widely implemented in several industries and both have their own unique benefits.
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