Lesson 1: Income - Salary

   Constructing Knowledge

Many employers pay their employees a salary as opposed to hourly pay. A salary is typically divided into 12 equal parts and paid monthly to an employee. Some professions that pay salaries are teachers, professional hockey players and politicians.

Salary:
A fixed regular payment made to an employee on a monthly basis, but often expressed as an annual amount.

Salaries may also be combined with bonus structures, which enable employees to earn more than just their annual salary.

Advantages of Salary

  • The pay is consistent. You will get the same amount of money every pay period.
  • Consistent pay makes budgeting easier.
  • Time off is often "paid time off". You will continue to be paid while on vacation.

Disadvantages of Salary

  • There is no overtime pay. Often, salary jobs will have you work more than 44 hours in a week but you will not be compensated for the additional hours.
  • Because salaried employees often only receive a monthly cheque, the time period between paycheques is longer.

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EXAMPLE 1

The average annual salary in the National Hockey League (NHL) in 2013 was 2.1 million dollars. What would the monthly gross pay be for a player earning the average salary.

Solution


Divide the annual salary by 12 to get the monthly salary:

monthly salary = $2 100 000 ÷ 12
= $175 000

The average monthly salary of an NHL player is $175 000.00

EXMAPLE 2

The average beginning teacher earns $4 486.00 per month. What is the yearly average annual salary of a beginning teacher?

Solution


Multiply the monthly salary by 12 to get the annual salary.

annual salary = $4 486.00/month × 12 months
= $53 832.00

The average annual salary of a beginning teacher is $53 832.00

Even though teachers get their summers off, their salaries are still divided by 12. That way they get paid in the summers too.


Now, it is your turn! Complete the questions in your Chapter 1, Lesson 1 Practice Makes Perfect that refer to Salary.



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