Piece Rate Work

Piece rate work is work for which an employee is paid a fixed amount for each unit of work produced. Specifically, the employer sets the piece rate that an employee will be paid per unit of output, and the employee’s earnings per day equal the number of units of output produced during the day times the piece rate per unit of output. This differs from hourly wage, which is based on the amount of time (number of hours) that an employee works. One example of piece rate work is a mechanic being paid by the number of car tune-ups completed. Another example is a seamstress who is paid by the number of shirts sewn.

Economic models predict that employees paid by piece rate will, all else ...