Your payoff from hiring a worker is the difference between the revenue increase from hiring a worker and the wage you pay that worker.
If you accept a job, your payoff is the wage you receive. If you do not accept a job, your payoff is the value from staying home.
Paying an $8 wage for a job that increases firm revenues by $13:
| Firm Payoff | = | Revenue Increase | – | Wage |
|---|---|---|---|---|
| $5 | = | $13 | – | $8 |
| Worker Payoff | = | Wage | ||
| $8 | = | $8 |
A worker who values staying at home at $6 and does not accept a job:
| Worker Payoff | = | Value of staying home |
|---|---|---|
| $6 | = | $6 |