Factors Affecting Wage Determination

Highly trained workers tend to earn more money.
Highly trained workers tend to earn more money. (Image: Jupiterimages/BananaStock/Getty Images)

Most people who are employed by another individual or a company are interested in increasing their hourly pay or their salary. To do this, it helps to understand some of the factors that are at play in determining how much an employee is paid. While there are general guidelines, each situation is different, and individual exceptions exist to every generalization about wage determinations.


How much experience an individual has in a specific field is a major contributor to her level of pay. Experience correlates with the ability to do a job well and shows that the employee is serious about her work and dedicated to that particular field. Workers in many fields receive annual raises when they remain with a particular company, and this practice increases the salaries of employees who have been around the longest, regardless of whether they are the most talented people in the company.


Many employers seek out employees with extensive education and are willing to pay more to employ them. People with the right education cost the company less to train and raise the public profile of the company as well. Some employees will have a master's degree or a PhD, while others will have qualifications in an industry-specific field of education; for example, a certificate as a Microsoft engineer. The most highly employable applicants are those who have both extensive academic qualifications and specific training in the field in which they are applying.


Different employers have different policies when it comes to paying their employees. While some try to save money by getting away with low salaries, others try to boost their position in the marketplace by capturing the best talent, and to do this they need to pay top salaries. Some employers will attract workers with high salaries, while others will rely on progressive policies or excellent benefits to bring in promising applicants. Different employers will also give raises in different ways and at different speeds. While a worker's income may increase in some workplaces based solely on seniority, in other places, extra effort and accomplishment are required.


The general state of the economy has an impact on the wages that people receive. The salaries of workers may be frozen or even reduced in response to a sluggish economy. Conversely, in boom times salaries in certain fields may skyrocket, as happened in the computer industry in the 1990s.

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