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Industrial & Organisational : Introduction : Personnel : Organizational psychology : Occupations: Work environment: Index : Outline


A salary is a form of monetary reward, periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with wages, where each job, hour or other unit is paid separately, rather than on a periodic basis.

From the point of a business, salary can also be viewed as the cost of acquiring human resources for running operations, and is then termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.

HistoryEdit

First paid salaryEdit

While there is no first pay stub for the first work-for-pay exchange, the first salaried work would have required a human society advanced enough to have a barter system to allow work to be exchanged for goods or other work. More significantly, it presupposes the existence of organized employers—perhaps a government or a religious body—that would facilitate work-for-hire exchanges on a regular enough basis to constitute salaried work. From this, most infer that the first salary would have been paid in a village or city during the Neolithic Revolution, sometime between 10,000 BC and 6,000 BC.

By the time of the Hebrew Book of Ezra (550 BC to 450 BC), accepting salt from a person was synonymous with drawing sustenance, taking pay, or being in that person's service. At that time salt production was strictly controlled by the monarchy or ruling elite. Depending on the translation of Ezra 4:14, the servants of King Artaxerxes I of Persia explain their loyalty variously as "because we are salted with the salt of the palace" or "because we have maintenance from the king" or "because we are responsible to the king."

The Roman word salariumEdit

Similarly, the Roman word salarium linked employment, salt and soldiers, but the exact link is unclear. The least common theory is that the word soldier itself comes from the Latin sal dare (to give salt). Alternatively, the Roman historian Pliny the Elder stated as an aside in his Natural History's discussion of sea water, that "[I]n Rome. . .the soldier's pay was originally salt and the word salary derives from it. . ." Plinius Naturalis Historia XXXI. Others note that soldier more likely derives from the gold solidus, with which soldiers were known to have been paid, and maintain instead that the salarium was either an allowance for the purchase of salt or the price of having soldiers conquer salt supplies and guard the Salt Roads (Via Salarium) that led to Rome.

Payment in the Roman empire and medieval and pre-industrial EuropeEdit

Regardless of the exact connection, the salarium paid to Roman soldiers has defined a form of work-for-hire ever since in the Western world, and gave rise to such expressions as "being worth one's salt."

Yet within the Roman Empire or (later) medieval and pre-industrial Europe and its merchantile colonies, salaried employment appears to have been relatively rare and mostly limited to servants and higher status roles, especially in government service. Such roles were largely remunerated by the provision of lodging and food, and livery clothes, but cash was also paid. Many courtiers, such as valets de chambre in late medieval courts were paid annual amounts, sometimes supplemented by large if unpredictable extra payments. At the other end of the social scale, those in many forms of employment either received no pay, as with slavery (though many slaves were paid some money at least), serfdom, and indentured servitude, or received only a fraction of what was produced, as with sharecropping. Other common alternative models of work included self- or co-operative employment, as with masters in artisan guilds, who often had salaried assistants, or corporate work and ownership, as with medieval universities and monasteries.

Payment during the Commercial RevolutionEdit

Even many of the jobs initially created by the Commercial Revolution in the years from 1520 to 1650 and later during Industrialisation in the 1700s and 1800s would not have been salaried, but, to the extent they were paid as employees, probably paid an hourly or daily wage or paid per unit produced (also called piece work).

Share in earnings as paymentEdit

In corporations of this time, such as the several East India Companies, many managers would have been remunerated as owner-shareholders. Such a remuneration scheme is still common today in accounting, investment, and law firm partnerships where the leading professionals are equity partners, and do not technically receive a salary, but rather make a periodic "draw" against their share of annual earnings.

The Second Industrial Revolution and salaried paymentEdit

From 1870 to 1930, the Second Industrial Revolution gave rise to the modern business corporation powered by railroads, electricity and the telegraph and telephone. This era saw the widespread emergence of a class of salaried executives and administrators who served the new, large-scale enterprises being created.

New managerial jobs lent themselves to salaried employment, in part because the effort and output of "office work" were hard to measure hourly or piecewise, and in part because they did not necessarily draw remuneration from share ownership.

As Japan rapidly industrialized in the 1900s, the idea of office work was novel enough that a new Japanese word (salaryman), was coined to describe those who performed it, and their remuneration.

Salaried employment in the 20th centuryEdit

In the 20th century, the rise of the service economy made salaried employment even more common in developed countries, where the relative share of industrial production jobs declined, and the share of executive, administrative, computer, marketing, and creative jobs—all of which tended to be salaried—increased.

Salary and other forms of payment todayEdit

Today, the idea of a salary continues to evolve as part of a system of all the combined rewards that employers offer to employees. Salary (also now known as fixed pay) is coming to be seen as part of a "total rewards" system which includes variable pay (such as bonuses, incentive pay, and commissions), benefits and perquisites (or perks), and various other tools which help employers link rewards to an employee's measured performance.

Salaries in the U.S.Edit

Further information: Income in the United States

In the United States, the distinction between periodic salaries (which are normally paid regardless of hours worked) and hourly wages (meeting a minimum wage test and providing for overtime) was first codified by the Fair Labor Standards Act of 1938. At that time, five categories were identified as being "exempt" from minimum wage and overtime protections, and therefore salariable. In 1991, some computer workers were added as a sixth category but effective August 23, 2004 the categories were revised and reduced back down to five (Executive, Administrative, Professional, Computer, and Outside Sales Employees)

"The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week." DOL's FairPay Overtime Initiative

Of these five categories only Computer Employees has an hourly wage-based exemption ($27.63 per hour) while Outside Sales Employee is the only main category not have the minimum salary ($455 per week) test though some sub categories under Professional (like teachers and practitioners of law or medicine) also do not have the minimum salary test.

General rule for comparing periodic salaries to hourly wages is based on a standard 40 hour work week with 50 weeks per year (minus two weeks for vacation). (Example: $40,000/year periodic salary divided by 50 weeks equals $800/week. Divide $800/week by 40 standard hours equals $20/hour).

Salaries in Japan Edit

Template:Expand section In Japan, owners would notify employees of salary increases through "jirei". The concept still exists and has been replaced with an electronic form, or email in larger companies.

See alsoEdit

ReferencesEdit


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