real wage

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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


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 ?
The most striking slide in a recent talk by Finance Undersecretary Karl Chua was the one titled 'Real labor productivity has been increasing, yet real wages have been stagnant,' rather than anything specific to his advertised topic of TRAIN (Tax Reform for Acceleration and Inclusion), at the Foundation for Economic Freedom.
Alternatives to conventional measures of real wages, as well as direct indicators of consumption spending, suggest that below-median income families have seen gains in material well-being since 1960.
Table 1 Real Wage Growth (in % terms), Mean Real Wage Levels (in rupees) for Workers with Union Membership, Workers without Union-Membership in Enterprises with Unions and Workers in Enterprises without Union Year Workers with Workers in Unionized Union Membership Enterprises without Union-Membership Real Wage Growth 30.
3% inflation forecast, this equals a real wage increase of 2.
Grant should have reemphasized the decline in real wages that made costs of production competitive, though he does refer later in the book to real wage reduction.
Some longer-term changes in the economy have likely played a larger role in depressing real wage growth.
TUC Midlands regional secretary Lee Barron said: "Despite growth returning, 2014 was another miserable year for living standards in the West Midlands with real wages falling by over PS1,000 in real terms.
The TUC believes that the combination of soaring house prices, stagnating pay in the run-up to the crash and the longest real wage squeeze in over a century will leave house prices more out of reach than ever before.
The scale of the real wage falls is historically unprecedented, certainly in the past fifty years where broadly comparable records exist (see Taylor et al.
TUC general secretary Frances O'Grady said: "Britain's great wage squeeze shows no sign of abating - 40 consecutive months of real wage falls means people have less to spend on the high street.
Real wage growth in the private sector has moved from -3.
Its research found a drop in real wage levels meant companies were able to take on more members of staff while output remained the same.