real wage


Also found in: Dictionary, Encyclopedia, Wikipedia.
Related to real wage: Money Wage

Real Income

Personal, corporate, or national income after accounting for inflation. Comparing one's real income from year to year shows how much income has grown or shrunk after adjusting for how much the buying power of the money has been affected. Nominal income compares only raw dollar amounts and does not account for inflation. For example, if one's nominal income has grown 10% and the inflation rate is 3%, the real income growth is 7%. Real income is also known as real wages. See also: Real GDP.

Real Wages

The wages that a person earns or that a company pays after adjusting for inflation. For example, if an employee makes $25,000 per year in both Year 1 and Year 2, but the inflation rate is 10%, that $25,000 is only worth 90% of its previous value ($22,500) in Year 2. This is good for the employer, but bad for the employee.

real wage

or

real income

the MONEY WAGE rate divided by the general PRICE LEVEL of products. Notationally, this is written W/P If wages and prices both rise by, say, 10% from an initial index number of, say, 100, the original ratio of W/P is 100/100 = 1, and the new ratio of 110/110 is also 1. An increase in real wages occurs when wages rise more quickly than prices or prices remain constant. In the latter instance, a rise in wages of 10% would give the ratio 110/100 = 1.1, thus making the wage earner 10% better off because he is capable of purchasing 10% more products with his new wage.

The analysis of real and money wages in relation to employment and output is a continuing central theme within economics although it is generally thought to be real wages that determines the level of employment rather than money wages. See CLASSICAL ECONOMICS, KEYNESIAN ECONOMICS, MONEY ILLUSION.

References in periodicals archive ?
Real wages are hardly highlighted in market reports or studies.
Increase real wage decline by 50%: 'Asf'/'Asf'/'BBsf'
The next worst affected area in the region was South Tyneside, down 7% or PS28 a week, then Sunderland where real wages have dropped by 5%, or PS22 a week.
'Actually, this phenomenon that you see, the real wage increase between 2000 and 2016, the growth rate was zero in the Philippines.
The decline in the wage share in non-tradables contributed in turn to the fall in the wage share in the manufacturing sector, where real wages fell despite a steady increase in labour productivity.
The figures, calculated by ETUI from independent data published in February 2018, aim to reflect the value of earnings - known as "real wages" - after inflation and living costs have been taken into account.
Rather, it deals with the problem of explaining the observed real wage rate differentials for given skills across countries, and in particular between the First World and the Third World.
In that case, MFP growth can be measured as a share weighted average of growth rates of returns to the factors of production, that is, real wage and real user cost growth rates.
Workers around the world are expected see real wage increases of 2.5%, according to a Korn Ferry Hay Group forecast.
Our government abandoned the gold standard in 1933 because it preferred currency depreciation to real wage deflation.
Some temporary factors may explain, in part, weak real wage growth during the recovery.
The TUC says UK workers have endured the longest real wage squeeze since records began in the 1850s amid fears it will take years for pay to recover to prerecession levels.