Final answer:
Compensation refers to all forms of monetary payments and benefits given to employees, which includes salaries, supplemental pay, insurance, retirement contributions, and more.
Step-by-step explanation:
The concept that refers to all monetary payments and all goods or commodities used in lieu of money to reward employees is compensation. Compensation includes not only direct payment such as salaries and wages, but also a variety of additional benefits. These benefits can consist of supplemental pay, various types of insurance, especially employee health insurance, retirement plans, contributions to Social Security, unemployment and workers' compensation insurance, as well as Medicare. In short, the total compensation per hour for an employee includes these elements as well as legally required benefits.
Compensation recognizes the effort employees put into their work as well as the costs they incur. The breakdown of how much is received in direct wages versus benefits can be observed in resources like Table 6.7 from the Bureau of Labor Statistics. Factors affecting the compensation can include experience, education, skill, talent, labor union membership, and the market's discrimination against certain groups.