Wage drift: Benefits

Definition and examples of Wage drift
By Abhishek Kathpal Updated 25 July, 2022

Sometimes (maybe even most times), employees get paid more than the agreed-upon sum in their contracts. The difference between what the company pays them and what the company initially agreed to pay them is wage drift.

What is Wage drift

Wage drift meaning and definition

As implied, wage drift is the difference between what a company pays an employee and what the company agreed to pay the employee in their original agreements. In other words, it is the difference between basic pay and actual compensation. It is usually a positive difference, meaning that an employee with a wage drift receives more than their negotiated base pay.

For instance, if an employee receives $20 an hour and works 40 hours per week, such an employee earns $800 weekly as base pay. If this fictional employee were to work 8 hours of overtime during the week, they would receive $240 as overtime compensation, bumping their weekly pay to $1,040. The $240 difference brought about by the overtime is the wage drift.

What causes Wage Drift?

  1. Overtime: As pointed out in the example above, overtime is among the most popular contributors to wage drifts. Employees who log overtime are paid more than their standard wage for the extra time.

  2. Bonuses: Companies and organizations employ bonuses as a form of incentive to stimulate better performance in employees. Meeting the required goals activates bonuses and contributes to wage drift.

  3. Additional responsibility: For whatever reason, a company can find itself in a position where it requires some employees to step up and take on more responsibility. In such situations, extra compensation befitting the added responsibility is added to the pay package of the individual at the end of the work employee(s) period.

About the Author

Abhishek Kathpal

Abhi is the co-founder at Longlist.io. Funded by US based OnDeck, Longlist is currently enabling 50+ businesses to increase their candidate and client reach outs, automating the workflow across stages.

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