Wage

Compensation paid per hour worked, as opposed to a salary which is a fixed amount regardless of hours.

A wage is compensation calculated based on the number of hours worked, paid at a fixed hourly rate. Waged (hourly) workers earn pay that varies week to week depending on hours worked — unlike salaried employees, who receive a fixed amount each pay period regardless of exact hours. Wages are common in retail, food service, healthcare, manufacturing, construction, and many other industries where labor hours map directly to output.

The distinction between wages and salary carries significant legal weight under the Fair Labor Standards Act (FLSA). Hourly workers are generally classified as non-exempt — entitled to overtime pay at 1.5× their regular rate for any hours over 40 in a workweek. Most salaried workers earning above the threshold ($684/week as of 2024) are classified as exempt and do not receive overtime, regardless of hours worked.

Wages are subject to federal and state minimum wage floors. The federal minimum wage is $7.25/hour, but many states and cities set higher minimums. A living wage — the hourly rate estimated to cover basic cost of living in a given area — is often significantly higher than the legal minimum and is increasingly used as a benchmark by employers focused on pay equity.

Wage vs Salary: Key Differences

  • Hours tracked: waged workers log exact hours; salaried workers are typically paid the same regardless of hours worked.
  • Overtime: non-exempt hourly workers earn 1.5× for hours over 40/week; most salaried exempt workers do not.
  • Pay predictability: wages fluctuate with hours; salary is fixed regardless of schedule variation.
  • Benefits eligibility: full-time hourly workers generally qualify for the same benefits as salaried workers; part-time often don't.
  • Scheduling: waged workers commonly have variable schedules; salaried workers more often have consistent hours.

Wage Floors and Regulations

  • Federal minimum wage: $7.25/hour — states and cities can and often do set higher floors.
  • Tipped minimum wage: $2.13/hour federal, with the expectation that tips bring total earnings to at least $7.25/hour.
  • Living wage: the estimated hourly rate needed to cover basic cost of living — often $20–$30+/hour in major metros.
  • Prevailing wage: government-mandated minimum pay rates for public works projects under the Davis-Bacon Act.
  • Wage theft: paying below minimum wage, stealing tips, or illegally withholding earned wages — illegal and reportable to the Department of Labor.

Example

A retail worker earns $18/hour. In a week she works 45 hours: $18 × 40 = $720 regular pay, plus $27 × 5 = $135 overtime, totaling $855 gross — before taxes.