Piece rate is a wage system where workers get paid per production unit at a fixed rate.
Example of Piece-Rate
What is an example of a piece-rate?
For example, pay your employee $12 for ten units produced. If 15 units are completed, pay for 1.5 groups.
Advantages and Disadvantages
What are the advantages and disadvantages of piece-rate system?
Advantages include being time efficient, production efficient, and cost accountable. Disadvantages involve hindered production and reduced quality.
Piece Work vs. Hourly Pay
Is piece work better than hourly pay?
Piece-rate may lead to more earnings in less time than hourly wages. However, it can prioritize quantity over quality. Employers can pay mechanics per vehicle repaired. Rates may differ per job, like brake jobs versus tune-ups. Piecework suits jobs in manufacturing, automotive repair, and construction.
Employers must meet minimum wage and overtime laws, paying the difference if piece-rate earnings fall short. In California, piece-rate workers get paid for breaks and downtime if working over 40 hours requires overtime.