Payment Systems and the Structure of Inequality: Conceptual Issues and an Analysis of Salespersons in Department Stores

Output-related payment systems-such as commissions and piece rates-are common in many jobs. Their central feature is that the wage of an employee is tied directly to her current performance. Focusing on salespersons in department stores, the author considers wage differences under three payment systems: a straight salary, a straight commision, and a salary plus commission. Four conceptions of wage inequalities under the three systems are contrasted: a risk-sharing, a bargaining, a sorting, and a social status interpretation. The empirical analyses compare the pay schemes and wages of approximately 63,000 salespersons in 178 department stores in 1981.