What are Wages?

Definition: A wage is compensation paid to employees for work for a company during a period of time. Wages are always paid based on a certain amount of time. This is usually an hourly basis. This is where the term hourly worker comes from. Other forms of compensation include salary and commissions.

What Does Wage Mean?

Lower level employees are paid based on the amount of time worked. These employees usually have a time sheet or time card to keep track of the hours worked per week. Most modern employers have computerized systems to keep track of hourly employee hours.

Employees must log into the system and log out to record their hours worked. Depending on the state, these employees are then paid once a week or once every other week. Hourly employees must receive overtime benefits if they work more than 40 hours each week.


Employees who receive wages cannot also receive a salary, but they can receive a commission. A commission is a payment for a specific action. Commissions are most commonly found in the sales industry. Salesmen and women are often paid a base wage and then paid a commission based on how many sales they make during a period. This is way for employers to encourage their sales staff to increase performance the sales floor while paying them a minimal wage.

Wages are reported just like any other expense. When the employer issues payroll checks to employees, wages expense is debited and the cash account is credited.

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