Gross Wage Rates and Net Wage Rates

[Dripping Rain]

While writing a paper on the stupidity of the FMW last night I fell on this awesome excerpt from "Human Action" by Ludwig Von Mises

It's a Short read that I highly recommend


In weighing the pros and cons of the hiring of workers, the employer does not ask himself what the worker gets as take-home wages. The only relevant question for him is, What is the total price I have to expend for securing the services of this worker? In speaking of the determination of wage rates, catallactics always refers to the total price which the employer must spend for a definite quantity of work of a definite type, i.e., to gross wage rates.
Continue here
http://mises.org/daily/4550

[Zippyjuan]

True. The number which is important to the employer is the gross wage- that is the amount of money they have to pay out for each worker they hire and is the one they use to decide to hire any more workers or not. They also have to include any benefits packages they may or may not offer the worker such as health insurance. For the employee, the important number is the net wages- that is the number they actually get to spend out of each paycheck.