How To Calculate Earnings, Pay For Piecework, Differential Piecework And With Guaranteed Hourly Wage

In this video we discuss how to calculate gross earnings for piecework, differential piecework and piecework with a guaranteed hourly wage. We go through an example for each situation.

Transcript/notes
Some jobs, called piecework are structured on incentive rates because they based on production or job performance. A piecework rate pays an employee a set amount per item produced or in some cases per mile.
The formula for this is gross earnings or pay equals, the pay per item, times the number of items produced.

As an example, let’s say that a worker is paid $.70 per sunglasses assembled, and they assemble 173 sunglasses on a given day, what was their pay, or gross earnings for the day?

Using the formula, their earnings would be $.70, the pay per item, times 173, the number of items they produced, and this calculates to $121.11 as their earnings for the day.

Another type of piecework is differential piecework. A typical differential piece rate plan is structured where the rate per item is dependent on the total number of items produced. As an example, let’s say that Josh works at a company that installs circuit boards. The pay scale is as follows, for 1 to 100 boards installed, $1.85 each, for 101 to 150 boards, $2.10 each, and for 151 boards or more, $2.35 each. If he installs 198 boards, what is his earnings?

We start by calculating his earnings for the 1st 100 boards he installed, which is the rate of $1.85 times 100 boards, and this equals $185. Next we calculate his earnings for boards 101 through 150, which is the rate of $2.10 times 50 boards, and this equals $105. Next, we calculate his earnings for boards 151 through 198, which is the rate of $2.35 times 48 boards, 198 minus 150, and this equals $112.80. Now we add up his earnings from the 3 tiers, $185 plus $105, plus $112.80, which calculates to $402.80, so, his pay, or gross earnings was $402.80.

The next type of piecework is piecework with a guaranteed hourly wage. In this method, the employer must pay the minimum hourly wage or the piecework earnings, whichever is higher. As an example, lets say that someone works at a factory assembling toys. The minimum wage in their state is $12 an hour for an 8 hour day. They are paid at the $12 per hour rate, or $.90 per toy assembled. Their production for a given week is as follows, Monday 113 units assembled, Tuesday 96, Wednesday 122, Thursday 124 and Friday 104 units. What was their weekly earnings?

First let’s calculate the daily minimum wage. The minimum wage for an 8 hour day at $12 per hour is 8 times $12, which equals $96. So, any day that their production was lower than $96, they will get the minimum of $96. Next, let’s calculate their daily piecework earnings. On Monday they produced 113 units, so, 113 units times $.90, which equals $101.70, Tuesday was 96 units times $.90, which equals $86.40, Wednesday was 122 units times $.90, which equals $109.80, and I’ve put the calculations for Thursday and Friday on the screen.

Any of these days that are less than the minimum daily wage of $96, we can cross off and put in $96. Both Tuesday and Friday are under, so we will put $96 in for each of those days. Now we can add up the totals, $101.70 + $96 + 109.80 + 111.16 + $96, which equals $514.66. So, their earnings for the week was $514.66.

Timestamps
0:00 What is piecework earnings?
0:13 Formula for piecework earnings
0:44 What is differential piecework earnings?
2:10 What is piecework with guaranteed wage?