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The average industrial wage is the average hourly wage earned by workers in a specific area, calculated by surveying all wages and averaging them. It is used as a benchmark for worker earnings and can impact consumption levels. The process is done through a survey and should be studied in context, considering inflation.
The average industrial wage is the average amount of money earned per hour by workers in a specific geographic area, such as a city or town. This rate is usually calculated using data obtained by surveying the geographic area, and is determined by taking all wage rates earned by workers in the area and averaging them. It is common for industry and labor leaders to use the average industrial wage as a benchmark to judge the earnings of a particular group of workers. Most analysts judge this rate not only by past rates in past years but also by the rate of inflation over time.
One of the main drivers of the economy is the amount of wages earned by workers. After all, these workers help stimulate the economy by using their earnings to consume goods and services. If these wages begin to lag, consumption levels will likely decline in kind. Consequently, it is important to have a good measure of the earnings of the average worker in a given group. This is where the average industrial wage comes into play.
To calculate the average industrial wage, all earnings of all workers in a given area, excluding agricultural workers, are added together and then averaged. For example, imagine a city where 100 people earn $10 US Dollars (USD) per hour, another 100 earn $12 USD per hour, and a third group of 100 earn $17 USD per hour. Adding all wages together and then dividing that total by the 300 total workers in the city gives an average rate of $13 USD per hour.
Once the average industrial wage has been calculated, it can be used as a standard of comparison for all jobs in the study region. Using that simplified example from above, it can be inferred that people making $10 an hour are falling well below the average rate. As a result, labor leaders may point to this discrepancy as something that needs to be corrected.
Because the average industrial wage often involves determining the earnings of millions of workers, the process is usually done through a survey. It’s important to understand that the average rate should never be studied without context. The average rate in an area might rise over time, but if it doesn’t keep pace with the rise in commodity prices caused by inflation, it can still be a problematic situation for workers.
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