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How Does Salary Work?

how-does-salary-work

In the United States, the simplest form of salary, the agreed amount of money to be paid to a part-time or full-time employee in exchange for services performed, is the hourly minimum wage.  As of July 2010, five states still have no minimum wage legislation – Alabama, Louisiana, Mississippi, South Carolina, and Tennessee. The highest hourly minimum wage ($8.55) is paid out in Washington, while the lowest hourly minimum wage ($5.15) can be found in Georgia and Wyoming.

Fixed Salary versus Hourly Wage Salary

The legislation governing state hourly minimum wages is set by the Department of Labor’s Wage and Hour Division (WHD), created in 1938 through the establishment of the Fair Labor Standards Act (FLSA).  There were challenges to the act, but its constitutionality was upheld by the Supreme Court in 1941 and for the most part, excluding the above-mentioned handful of states still without a minimum hourly provision, it has greatly changed the way the lowest paid employees in the U.S. are treated and recompensed. Most notably by introducing the concept of overtime, wherein a hourly wage worker earns considerably more if they are asked to work an amount higher than the standard amount of 40 hours per five-workday period.

For other full-time workers, salary is an annual amount, divided by 52 weeks of the year and paid out weekly or bi-weekly. A minimum amount of federal and state tax must be docked from the gross salary amount, based on the withholding level (zero to nine) claimed by the employee.

Annual Salary Survey

There is arguably no better snapshot of U.S. annual salaries than Parade Magazine’s annual “What People Earn” cover story.  Each spring, the widely read Sunday newspaper supplement compiles a large number of individual mug shots along with each pictured person’s occupation and annual salary. It’s never less than an astonishing landscape, reminding readers of the small amounts of money many people must survive on and the outlandish fortunes claimed by those who reach the full extent of the American dream. The 2010 survey included a U.S. army dog trainer, at $30,000, and Facebook founder Mark Zuckerberg, at $3 billion.

 

Resources

United States Department of Labor – Wage and Hour Division, “Minimum Wage Laws”, Retrieved September 6, 2010 from http://www.dol.gov/whd/minwage/america.htm

United States Department of Labor – Wage and Hour Division, “History”, Retrieved September 6, 2010 from http://www.dol.gov/whd/about/history/whdhist.htm

CBS 6 Albany – “Parade Magazine Salary Survey”, April 9, 2010, Retrieved September 6, 2010 from http://www.cbs6albany.com/articles/salary-1272782-parade-survey.html

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