When starting a new job, there are lots of things to think about. Does this job offer good hours? Is it easily accessible by the modes of transport available to me? Will I feel satisfied with my work? And the big question: does it provide the money I need?
When it comes to payment for jobs, there are several factors to consider. One of these is whether or not to choose a salaried job or, instead, a wage-based job. Salaries and wages, whilst both providing you with money, come with different benefits and drawbacks.
In all likelihood, the benefits of a salary or a wage will depend on your lifestyle, and what you are looking to get out of a job. But before we get into pros and cons…
What is a salaried job?
When a job offers you a salary, it offers to pay you a pre-decided, fixed amount. This amount is often for a year but is paid chunks at (usually regular) intervals – often weekly or monthly.
What is a wage job?
When a job offers you a wage, they offer to pay you an hourly rate of pay. Therefore, the amount you receive – often paid daily or weekly – will depend on how many hours you work a week.
Advantages of a salary
When it comes to a salaried job, what benefits are available to you? Well, with a salaried job, you will be paid a fixed amount at fixed intervals. Perks of this? You will be paid the same amount, no matter how many hours you work that week. You will be paid the same amount, even if the company breaks for holidays.
Think of teachers – they are still paid, even over the summer holiday. This is because their job is salaried.
The stability provided by a salaried income means you will be able to budget better. Knowing the exact money available to you will help you either stay away from big expenses as you know you can’t afford it or let you buy big-ticket items as you know they are within your means.
Consistency in income can help you to save. If you send a certain percentage of your income into savings, you can easily calculate how long it will take to save a certain amount.
Salaried employees are also much more likely to receive a benefits package with their job. These benefits will likely include healthcare, paid vacation days and contributions to your retirement / a pension.
Disadvantages of a salary
Salaries tend to offer higher pay than wages. However, this is because salaried jobs often require work outside of the working week. To return to the teacher illustration – think about how much work teachers do outside of the school week. Marking on weekends, running of extra-curricular activities, lesson planning in the holidays. With salaried jobs, it can be difficult to fully ‘clock off’ from your job.
Plus, if a salaried worker works more in one week, their pay will not change to reflect this. This can be a little disheartening; if this happens regularly, you may end up doing more work than you are being compensated for.
This can come to a head if the company you work for is going through a time of financial difficulty. When companies are struggling, they can lower salaries, leading to even worse compensation for the level of work you are producing.
Advantages of a wage
In contrast, wage earners are paid specifically for the hours that they work. You will never be unpaid for work you haven’t done, and it’s much easier to mentally ‘clock off’ from a waged job. When you go home, you’re home. You don’t have to think about your job, as there is no requirement to keep doing it when you aren’t in your working hours. If your boss wants you to come in to work more hours for the company, they have to pay you for it. No exceptions.
Plus, overtime work will, in most cases, pay more!
In a similar vein, a higher wage can be achieved when working on holidays. Often, lots of wage work is advertised around Christmas, when shops and restaurants are at their busiest. Holiday pay is higher than usual pay because the employers’ demand is higher, and as workers, you are sacrificing more.
A contract does not bind waged workers in the same way salaried workers are. The benefit of this is that you can easily leave your wage job if you find a better paying job.
One of the biggest benefits of a wage job is the immediacy of pay. Most wage workers are paid daily or weekly. This means that, as expenses come up, you can pay them.
Disadvantages of a wage
The immediacy of pay for wage workers, whilst a strong benefit, does highlight one of the issues with a wage job. When earning a wage, your pay will differ from week to week, depending on how many hours you work. If this number changes, it can be difficult to keep aware of how much income is coming in. An easy way to fix this is to use a wage conversion calculator. Still, the fluctuating nature does lead to an inconsistency in pay.
When the amount of income fluctuates, it can be harder to budget long term, or to know how long it will take to save for certain expenses.
Plus, if your company goes through difficult financial times, waged employees are usually the first to be cut. On top of this, waged employees are rarely given benefits.
Salary or wages?
When it comes down to it, choosing a salary or wage will depend on which suits your needs best. Do you need to completely clock off work to focus on your family when you are home? Or would you like the consistency of a salary so you can start saving for your first home? Consider all these factors when choosing to work a salary or a wage.