The Differences Between a Stipend & Wages
Earning a stipend and earning a wage for a job are two distinct situations, though both involve payment from an organization to an individual. Each arise in different circumstances that depend on the needs of the employer. There are implications for the person earning the stipend or wage beyond the amount they are paid.
Other People Are Reading
-
Who Earns What
-
Part-time or full-time employees of an organization earn a wage on an ongoing basis. An employee earning a wage will continue working for the organization until they quit or are terminated. A stipend is a flat amount of money paid either up front or at the end of a certain period of time, like three months. Someone paid a stipend can only expect the funds for the period agreed upon at the outset.
Types of Work
-
Employees in a wide range of fields earn wages, from supermarket checkers to newspaper reporters. Wage-earning employees earn set amounts per hour of work. Stipends typically go to academic researchers or student interns and sometimes clergy who are forbidden from earning a salary. A stipend often covers living expenses while the recipient conducts research or learns new skills. The recipient is not usually required to work specific hours or days of the week.
-
Tax Implications
-
Income from wages or from a stipend is considered taxable income. The employer usually withholds taxes from a wage-earning worker's paycheck but that does not always happen for someone paid a stipend. This means someone paid via stipend may owe more taxes at the end of the year. If a stipend is used only to cover tuition and related expenses, it may qualify as a scholarship and thus not be taxed.
Rights of Employees
-
Someone earning a wage from an employer is protected by laws regarding workplace safety, collective bargaining, minimum wage, and others. A worker paid a stipend has no such protections but he may not have to report to a supervisor or be expected to work in a specific location.
-
References
Resources
- Photo Credit Hemera Technologies/AbleStock.com/Getty Images
