Glossary of Human Resources Management and Employee Benefit Terms
Hourly to yearly is a term used when calculating how much an employee who is paid by the hour would earn under an equivalent yearly salary. This calculation is called an hourly to yearly conversion. Despite the word “conversion,” it does not change how an hourly worker is paid, but simply tallies their annual income.
Hourly workers (and their employers) may wonder how their wages compare to other workers who are salaried. An hourly to yearly conversion enables them to compare apples to apples.
Calculating an hourly employee’s yearly salary is simple. Just add up the number of hours they work in a year and multiply it by their hourly rate. For example, an employee who works 1,800 hours per year and is paid 40 dollars per hour earns the equivalent of an annual salary of 72,000 dollars.
Overtime rates, bonuses, holiday differentials, and other adjustments to the employee’s usual pay are generally not considered in this basic calculation.
A salaried worker can use a different formula to see what their unadjusted hourly wage would be. First, multiply the number of hours they work each day by the number of days they work in a year to determine how many hours they work per year. Divide that figure by their annual salary. The result is their hourly wage.
For example, if an employee works eight hours a day on 240 days in a year, that’s 1,920 hours. Divide their annual salary of 57,600 dollars by 1,920 and you see their hourly wage is 30 dollars.
Whether you convert from hourly to yearly or yearly to hourly, remember that these figures represent gross income, which is income before any payroll deductions are made for taxes, employee health insurance, etc. Take-home pay after deductions will be less.