Real wages
Real wages refer to the amount of money a person earns from their job, adjusted for inflation (which means how much the prices of things go up over time).
When someone is paid a real wage, it means they are earning enough money to keep up with the rising cost of living. For example, if someone's pay stayed at $10 an hour for several years, but the price of bread, rent, and other things they need to buy went up every year, they would not be able to buy as much as they used to with that $10 an hour.
Real wages take into consideration the effect of inflation, which means even if someone's salary stays the same, they are still able to buy the same amount of goods and services over time. So, if someone's real wage is $10 an hour, it means that their salary has been adjusted for inflation, and they can buy the same amount of things with that money, even as prices go up.
It's important to note that real wages are different from nominal wages, which is the amount of money someone earns without accounting for inflation. For example, if someone is paid $10 an hour, but the inflation rate is 2%, their real wage would be $9.80 an hour, as that's the amount of money needed to buy the same things as $10 bought a year earlier due to inflation.
In conclusion, real wages are the amount of money someone earns adjusted for inflation to maintain their purchasing power over time.
When someone is paid a real wage, it means they are earning enough money to keep up with the rising cost of living. For example, if someone's pay stayed at $10 an hour for several years, but the price of bread, rent, and other things they need to buy went up every year, they would not be able to buy as much as they used to with that $10 an hour.
Real wages take into consideration the effect of inflation, which means even if someone's salary stays the same, they are still able to buy the same amount of goods and services over time. So, if someone's real wage is $10 an hour, it means that their salary has been adjusted for inflation, and they can buy the same amount of things with that money, even as prices go up.
It's important to note that real wages are different from nominal wages, which is the amount of money someone earns without accounting for inflation. For example, if someone is paid $10 an hour, but the inflation rate is 2%, their real wage would be $9.80 an hour, as that's the amount of money needed to buy the same things as $10 bought a year earlier due to inflation.
In conclusion, real wages are the amount of money someone earns adjusted for inflation to maintain their purchasing power over time.
Related topics others have asked about: