Types of Pay and Criteria Used to Determine Wage

You may be getting ready for your prom now, but you also have to keep your professional future in mind. Although it is possible to enter the job market with a high school diploma, having a Diploma of Vocational Studies (DVS) or a post-secondary degree will enable you to develop your skills and open up more job opportunities.

Usually, the higher the level of education, the higher the salary or pay is likely to be, but can other things affect it too? Are there other ways to get paid than by the hour?

To find out, start by asking your family members for their opinions.

Your father has been running a construction company for more than 15 years. He has two diplomas: a Diploma of Vocational Studies (DVS) in construction with a major in electricity and an Attestation of College Studies (ACS) in business management. He manages more than 30 employees daily to make sure they perform their duties on the various construction sites. He has many responsibilities since the operation of the whole company depends on him. If an electrician makes a mistake that causes a problem in a house, your father will have to find a solution and repair it to meet the delivery date.

Your father’s salary is much higher than the electricians he employees, for example. Why is that? Your father has two diplomas and gained more skills—meaning knowledge and aptitudes—related to working as an electrician and builder. As a business owner, your father has learned to:

• manage human resources, meaning his employees

• manage all the bookkeeping for his company

• communicate better

• solve all kinds of construction problems

Your father has to perform many tasks, whereas an electrician only has to focus on maintaining and repairing electrical systems. Your father’s duties and responsibilities are more complex, which is why he earns more money than his employee. Your father’s experience, including the number of years he has been working, also comes into play in determining how much money he makes.

As you can see from your father’s example, many criteria affect earnings:

• educational background (level of education, number of degrees)

• experience (also called seniority)

• responsibilities

• skills

• duties or tasks performed

• performance (the more effective and efficient a person is at work, the better the performance of the company)

In general, the more qualified a person is for their job, through training and experience, the more money they will earn. 

Other criteria can also affect pay.

• Isolation: Some employers offer isolation pay to attract workers. For example, the government has set up the Plan Nord program to encourage Québécois to work in northern regions.

• Risk: The more dangers and risks a job involves in terms of health and safety, the higher the pay.

For example, after completing a DVS in power line installation, your cousin Cindy became a lineworker. She has to handle and repair high-voltage lines, faces the risk of falling (since she always works at some height) and sometimes has to work in bad weather. Her salary is likely to be higher than someone working in an office, where there is no safety risk. 

Note that, even today, women are generally paid less than men. The Pay Equity Act aims to reduce the pay gap between women and men.

These criteria are all directly related to pay. Like the cost of education, wages can vary from one province or country to another. Depending on the field of study, a high level of education does not necessarily guarantee a higher salary. Supply and demand are other factors that influence earnings, in the same way supply and demand influence the price of food. If there is a shortage of dishwashers in restaurants, an employer may decide to increase the wages to attract more workers. 

A career should not be chosen based only on how much you will make, but also on your values, passions and desires.

Now you know about the different factors that influence your pay. What about the types of pay? Your cousin, the lineworker, has an hourly wage, meaning she is paid by the hour, and she receives a biweekly payment with the amounts detailed in her pay stub.

However, there are many other ways of getting paid for services provided to an employer or to clients.

Your friend Florence works on commission. She is a sales representative for a company specializing in cell phone and cable packages. Besides her base pay, Florence receives a commission based on her performance. So, the more telecommunication services she sells to her customers, the more money she will make. She is very good at public speaking and knows she has all the skills needed to do the job:

• identifying the needs of each customer

• selling services adapted to the needs of the customers

• being proactive and creative in developing sales strategies

• producing sales reports

• participating in team meetings

The list of duties (tasks) to be performed is described in the job posting published on a job search website by an employer. See the following concept sheet for a detailed example of a job posting:

• The Job Search

Three of your friends work in the same restaurant. Marco is a cook and earns $18 an hour, 40 hours a week. When he works overtime on a busy night, he will be paid for those hours on top of his regular 40 hours.

Samantha is a server, bringing out the delicious food that Marco prepares for customers. Samantha’s $14 hourly wage is slightly above the minimum wage. Samantha also receives tips, usually equal to 15% of the total bill, from her customers. The total amount for the evening can exceed $400. If Samantha works six hours at $14 per hour, her gross pay for the evening would be $484. The amount of money varies depending on the number of customers and their generosity, because consumers are not legally required to tip.

Christian works at the take-out counter, and he is paid the same as Marco, $18 per hour. He gets a share of the tips that all the other employees doing the same job earn during the week. The employees have decided to write up a sharing agreement outlining how tips are shared. In a given week, tips from all the employees could total $1,400, which gives Christian $140 more than his base weekly pay. Since there are 10 employees and they decided to share the tips equally, everyone gets the same amount.

The sharing agreement is discussed and agreed upon by the employees only: the employer cannot dictate how tips will be shared.