When economists talk about wage they are referring to an equation. That equation is wage is equal to the product of marginal production of labor and price level. Which means, the amount of money earned is made equal to how much productivity the next person brings to the operation times the index measure of the price of goods. So your income is can be broken down into two sets. The first being how productive you are as a worker. Why do good pitchers make more money than bad pitcher? It is because good pitchers produce more benefits for the team. These higher benefits must be equalized by higher cost, in order to have a balanced equation. The second part is far more abstract. The price level, can be understood better by comparison. This economic indicator tries to compare how much some good cost relative the value of the good in a different point in time. So when your grandmother said “Bread use to cost a nickel, and now it’s a dollar” that is evidence that the price level has shifted over time. We measure price level by the Consumer Price Index, CPI for short. The CPI is a fairly constant “basket” of goods, whose change in value over time results in a measurable index. When we combine someone’s marginal production of labor and the price level, we can discover their economic wage. This can be helpful in uncovering the macro-economic effects of things like education over time. For example, if we see wages raising and price level staying constant, then we know people are becoming more productive, and wage increase are not just from inflation.