Question: What Factors Determine Pay?

How are wages determined?

Classical economists argue that wages—the price of labor—are determined (like all prices) by supply and demand.

They call this the market theory of wage determination.

Long story short: the price of labor is determined in the free market just like every other price, by the intersection of supply and demand..

Why do some employees get paid more than others?

A common reason for pay disparity is nepotism. The boss may hire a relative to start them in the business and advance their career. The relative may be hired with a job title identical to others in the firm but may be given a preferential salary due to the family ties.

What are examples of wages?

Example of Wages For example, a warehouse employee works 40 hours during the work week. If the employee’s hourly rate of pay is $15, on the 5th day following the work week, the employee will receive a paycheck showing gross wages of $600 (40 x $15).

Is it illegal to pay someone less for the same job?

Pay/compensation discrimination occurs when employees performing substantially equal work do not receive the same pay for their work. It is job content and not job titles that determine whether or not jobs are substantially equal. … Discrimination can occur due to sex or race, which are both prohibited under federal law.

What are the 4 things to consider when doing salary benchmark?

How do we choose which surveys to use?Does the survey contain jobs that are relevant to my organisation?Is the job matching approach robust?How easy will it be for me to match my jobs to the survey jobs?Are the survey participants relevant to my organisation?More items…•

Is it illegal to pay someone more for the same job?

“Favoritism, cronyism and nepotism are not illegal either. The employer can say, ‘I gave that employee an increase because I felt like it,’ and that is not illegal.” There are often legitimate reasons for treating the compensation of two workers differently.

Can you be fired for discussing pay?

Established all the way back in 1935, the NLRA made it illegal for an employer to fire an employee just for talking about wages at work. In 2014, President Obama signed an executive order – Non-Retaliation for Disclosure of Compensation Information – that helped further cement the NLRA’s power and importance.

What factors determine salary?

Eight Factors That Can Affect Your PayYears of experience. Typically, more experience results in higher pay – up to a point. … Education. … Performance reviews. … Boss. … Number of reports. … Professional associations and certifications. … Shift differentials. … Hazardous working conditions.

What factors should be considered for determining the salary of an employee?

5 Things to Consider When Determining Your Employee’s SalaryDefine the job. Define the job’s purpose, essential duties and responsibilities, required skills and knowledge, experience, and educational level. … Price the job. … Determine the job’s internal value to your organization. … Place the job in your salary structure. … Consider organizational factors, including budget.

Can they decrease your salary?

A pay cut cannot be enacted without the employee being notified. If an employer cuts an employee’s pay without telling him, it is considered a breach of contract. Pay cuts are legal as long as they are not done discriminatorily (i.e., based on the employee’s race, gender, religion, and/or age).

What are the two types of wages?

You may use a few payment methods to compensate employees. Wages can generally be split into two categories: regular and supplemental wages.

Who determines the minimum wage?

The federal minimum wage is regulated by the Fair Labor Standards Act (FLSA) and enforced by the U.S. Department of Labor. Although the federal minimum wage rate is subject to change, it has not increased since 2009. The current federal minimum wage is $7.25 per hour.