Wednesday, November 24, 2010

The Difference between a Salary and a Wage

In the end, both a salary and a wage are money that you have earned! And both are money that you've worked hard for!  And whether you earn a salary or wages, you have to report your earnings to the IRS!  

But these are two different words that do not refer to the same thing. So what's the difference between a salary and a wage?

SALARY:  Some jobs pay an amount per year.

This is the meaning of a salary.  For example, if you are the President of the United States, you earn an annual salary. You earn $400,000. per year.  If you are a Supreme  Court Justice, you earn a salary.  Your salary is $223,500  .  If you are a United States Senator, your salary is set at $162,100.

WAGES:  The vast majority of jobs do not have set salaries, but hourly wages.

This is the amount you are paid per hour.  The United States Congress sets the minimum hourly wage, which is currently at $7.25 per hour.

A recent example of an advertisement wrote this:

Hourly Wage for All Hours, Plus Bonus, Putting Up Christmas Decorations  Starting pay is $10 hour. If you are willing and able to climb on steep roofs, you will be paid $12 per hour. Over-time will be paid over 40 hours.

If you are a teacher, you probably have a salary.

If you are a waiter or a waitress, you probably earn an hourly wage plus tips.

Generally, people at "the bottom" of the income scale receive (hourly) wages, that is, they are paid a rate for each hour that they work, while people who are "at the top" of the income scale receive a salary.

So the next question is - what do you ask when you want a raise? What do you say to your employer when - whether you receive an hourly wage or an annual salary, you want to climb that income ladder??


  1. Great explanation! One of my students just now emailed me asking me the difference and I'm going to send him this page!

    1. I'm glad you found it helpful - and hopefully your students did too!