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Wage Expense

What is 'Wage Expense'

In financial accounting, wage expense represents payments made to non-manufacturing employees, regardless of whether they are hourly or salaried. Depending on the presentation, this line item may also include payroll tax expenses and other benefits paid to employees. Wage expense is recorded as a line item in the expense portion of the income statement.

Explaining 'Wage Expense'

Under the accrual method of accounting, wage expenses are recorded based on when the work was performed. By contrast, under the cash method of accounting, wage expenses are recorded at the time cash is paid to employees.
Salaries and wages paid to manufacturing employees are not recorded as wage expense. Instead, they are allocated as part of the cost of the goods manufactured. Initially, the wages and salaries are included in inventory line on the balance sheet. Once inventory is sold, the allocated costs become part of the cost of goods sold (COGS) line item on the income statement.


Further Reading


Negotiating with labor under financial distress
academic.oup.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

The age of monopoly-finance capitalThe age of monopoly-finance capital
search.proquest.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

Is there discretion in wage setting? A test using takeover legislationIs there discretion in wage setting? A test using takeover legislation
www.jstor.org [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

An economic analysis of a drug-selling gang's financesAn economic analysis of a drug-selling gang's finances
academic.oup.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

Financialization, the financial and economic crisis, and the requirements and potentials for wage-led recoveryFinancialization, the financial and economic crisis, and the requirements and potentials for wage-led recovery
link.springer.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

Competition and contestability in Canada's financial system: Empirical resultsCompetition and contestability in Canada's financial system: Empirical results
www.jstor.org [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

Wages and risk-taking in occupational credit unions: theory and evidenceWages and risk-taking in occupational credit unions: theory and evidence
www.questia.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …

Spanish football in need of financial therapy: Cut expenses and inject capitalSpanish football in need of financial therapy: Cut expenses and inject capital
search.proquest.com [PDF]
… In this article, we analyze the role finance plays in renegotiations of labor contracts … Using a unique data set of airlines, which includes detailed information on wages, benefits, and … an empirical link between airline financial distress, pension underfunding, and wage concessions …



Q&A About Wage Expense


Where do manufacturing wages and salaries appear on an income statement?

Initially, they appear on the balance sheet under inventory. Once inventory is sold, the allocated costs become part of the cost of goods sold (COGS) line item on the income statement.

How does wage expense differ from manufacturing wages and salaries?

Manufacturing wages and salaries are not recorded as wage expenses. Instead, they are allocated as part of the cost of goods manufactured.

What is a wage?

A wage is the distribution of an employer's profit from an employee.

Are wages paid to employees based on individual performance?

Wages are not always paid to employees based on individual performance.

What is wage expense?

Wage expense represents payments made to non-manufacturing employees, regardless of whether they are hourly or salaried.

How does payment by wage differ from salary, commission, and gratuity?

Payment by wage differs from salary in that it pays regardless of hours worked; differs from commission in that it conditions pay on individual performance; and differs from gratuity in that it is paid direct"" (as opposed to being given as a tip).