Salary and Salary Models

Stephen Jacobson

Salary is the monetary compensation workers receive in return for their services (salary is also called wage earnings or pecuniary rewards). Workers often receive additional benefits, such as medical coverage and/or contributions to pension funds, but salary is the most visible and tangible aspect of employee compensation. Salaries paid for jobs both across and within occupations are readily amenable to comparison; therefore, salary is often used to assess the relative attractiveness of different positions. Salary models represent alternative approaches to the distribution of monetary compensation. Salary models are usually based upon traditional economic assumptions about worker behavior. Specifically, it is assumed that a positive relationship exists between income and effort and that employees will work harder if they can earn more money. Examining the criteria used by salary models to distribute employee wages can help to explain what is of value to an organization. Salary models in education have evolved ...

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