Wage labor is one of the characteristics of capitalism because that is how the owners of the means of production in capitalism get others to work for them. In previous times in history, the rich were able to get others to work for them through such means as slavery, serfdom, and tenant peasantry. By the time capitalism came around, these modes of labor were largely gone so the rich had to pay others to work for them. We can define wage labor as the practice of paying people money to work for you although they remain free to leave your employ and go work for someone else if they are willing and able to do so.
Socialists say that this causes inequality because the owners of the means of production exploit the labor of the workers. (Please note that socialists do not say that there was equality before capitalism arose. Instead, the inequality was simply different.) In capitalism, the owners of the means of production are able to dictate how much of the profits come to them and how much is passed on to the workers. The owners are able to keep the majority of the profits for themselves even though the workers do all the work (in the eyes of the socialists). The socialists believe that this is unfair and they believe that it creates inequality.