Your guides give you the basics about how employers pay wages.
Let’s talk about one great part of any job: getting paid!
That’s definitely one of my favorite topics …. and if you want to be smart about money, it pays to understand the basics. The money you earn in exchange for your work is called a “wage” and there are a number of different ways that employers pay wages.
Right. So for example, in my very first job, I got paid by the hour. For the first 90 days they paid me a training wage. After that I earned the minimum wage. Now I earn a salary; it’s the same set dollar amount every month.
At my last job, I worked at a retail store. I got paid hourly, but I also earned commissions on all the merchandise I sold. That extra money motivated everyone to try to sell more.
The main thing is to make sure you understand exactly how, and how much, your employer is paying you— and when you get paid, make sure the amount is fair and accurate.
And remember: it never hurts to explore what you could do for your company that could move you up to even higher pay.
The money, or compensation, you earn in exchange for work. Some common ways employers pay wages are hourly, salary, and commission — or some combination of these ways.
An hourly amount voted into law by the U.S. Congress. All employers in the U.S. have to pay their employees at least the minimum wage unless their state law says differently. Some states actually allow some employers to pay a lower minimum wage. Usually these are very small businesses that only do business locally.
In some cities, towns, and counties around the U.S. — especially those that have a high cost of living — local laws have been passed that require some employers to pay what’s called a living wage, which is a dollar amount that’s higher than the federal minimum wage to help workers meet their basic needs. Usually it applies to government jobs or to employers with government contracts. Check on the local laws where you live.
Note: At the end of the year, your employer will issue you an IRS form W-2 that summarizes your taxable wages and the taxes that the employer has deducted or “withheld,” from your pay.
Click the Next button to learn how to read your paycheck.