What is a 'Wage Expense'

Wage expense is the cost incurred by companies to pay hourly employees. This line item may also include payroll taxes and benefits paid to employees. Wage expense may be recorded as a line item in the expense portion of the income statement.

BREAKING DOWN 'Wage Expense'

Wage expenses are sometimes reported by department, and they are most likely to be reported separately for the production department. This department is often the one with the most hourly employees. On the other hand, wage expenses for production workers may be incorporated into the cost of goods sold (COGS) item on the income statement. 

Wage expenses vary from one period to the next, depending on the number of business days in the period and the amount of overtime to be paid. Business days vary from month to month and may be affected by the number of holidays during the period.   

Under the accrual method of accounting, wage expenses are recorded based on when the work was performed. In contrast, under the cash method of accounting, wage expenses are recorded at the time the payments are made.
 

RELATED TERMS
  1. Wage Push Inflation

    Wage push inflation is a general increase in the cost of goods ...
  2. Minimum Wage

    The minimum wage is a legally mandated price floor on hourly ...
  3. Cash Wages

    Cash wages are compensation for employees that come in the form ...
  4. Expense

    An expense consists of the economic costs a business incurs through ...
  5. Administrative Expenses

    Administrative expenses are the expenses that an organization ...
  6. Average Industrial Wage

    Average industrial wage is the mean hourly rate of pay for workforce ...
Related Articles
  1. Insights

    Minimum Wages Can Raise Unemployment

    Learn why many economists feel that minimum wages, while intended to benefit low-wage workers, actually hurt them by increasing unemployment.
  2. Insights

    Will You See Higher Wages In 2015?

    It's been a few years into the economic recovery from the Great Recession, and the employment picture has been rocky.
  3. Insights

    Good News: Long-Awaited Wage Growth is Finally Happening

    American wages reached record levels last year--and not just for the wealthy.
  4. Personal Finance

    Why Low-End Jobs Are Paying More

    More companies are now paying employees in low-end jobs higher wages. Here is why – and who benefits.
  5. Personal Finance

    How Minimum Wage Impacts Unemployment

    We explain how the minimum wage affects unemployment, public assistance, and the economy overall.
  6. Personal Finance

    Can A Family Survive On The U.S. Minimum Wage? (WMT, COST)

    As the political debate roars on, the numbers are clear: Even two full-timers at U.S. minimum wage can't keep a family of four above the poverty line.
  7. Personal Finance

    The Minimum Wage: Does It Matter?

    The numbers show that a fight for a living wage is more important than a fight for a raise in minimum wage.
  8. Insights

    Why Minimum Wage Is a Kingmaking Issue in Elections

    Minimum wage is an essential issue for presidential candidates in the lead-up to the 2016 election. We look at the reasons why.
  9. Insights

    Wal-Mart's Wage Increase Has Potential Drawbacks for Workers (WMT)

    Wal-Mart workers were overjoyed to hear that they would receive $10 an hour. However, there are significant non-financial drawbacks to this raise.
  10. Insights

    Opinion: Trump's Lament That He 'Inherited a Mess' of an Economy? False! Sad!

    So much for The Donald’s ‘Crippled America,’ as new numbers show incomes soaring under Obama.
RELATED FAQS
  1. Does raising the minimum wage increase inflation?

    Explore whether raising the minimum wage increases inflation. This is a polarizing topic that is inherently linked to unemployment. Read Answer >>
  2. Which states have the lowest minimum wage?

    Learn which two states share the lowest state minimum wage and are also the only two that sit below the required federal ... Read Answer >>
  3. How are operating expenses different from SG&A?

    Usually synonymous, operating expenses and selling, general and administrative expenses are sometimes listed as separate ... Read Answer >>
  4. What are general and administrative expenses?

    General and administrative expenses are not directly attributable to the production of goods and services and include audit ... Read Answer >>
  5. What's the average hourly wage of waiters and bartenders before tips

    Learn how much per hour waiters, bartenders and other tipped employees make before tips under federal and state minimum wage ... Read Answer >>
  6. How does accrual accounting differ from cash basis accounting?

    The accrual and cash-basis methods recognize revenue and expenses at different times. In this article, we analyze the advantages ... Read Answer >>
Trading Center