Glossary of Human Resources Management and Employee Benefit Terms
Wage to salary is a method of calculating how much a worker who earns an hourly wage would make if they were paid with an equivalent salary. This calculation is known as a wage to salary conversion.
No. Hourly workers continue to earn the same hourly wage. The conversion is merely a method of showing how much they would make if their employer paid them an annual salary instead.
Workers who are paid by the hour may wonder how their wages stack up against other workers’ salaries. Also, wage to salary conversions can help employers to see at a glance whether hourly and salaried workers are receiving equal pay for equal work.
You can calculate what an hourly worker’s wages would amount to as an annual salary with two simple steps.
Multiply the number of hours they work per week by their hourly wage to show one week’s earnings.
Multiply that number by 52, the number of weeks in a year.
The resulting figure is their equivalent yearly income.
For example, if Jonas earns $25 per hour and works 40 hours per week, multiplying those figures shows he earns $1,000 per week. Multiply that by 52 and you see that his equivalent annual salary would be $52,000 per year.
Overtime rates, bonuses, holiday pay, and other adjustments to the employee’s usual pay are generally not included when making this basic calculation.
A different formula can show a salaried worker what their equivalent hourly wage would be.
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 Maria works eight hours a day on 240 days per year, that’s 1,920 hours. Divide her annual salary of 75,000 dollars by 1,920 and you see her equivalent hourly wage is $39.06.
Whether you convert from hourly wage to salary or from salary to hourly wage, remember that these figures don’t include any payroll deductions for taxes, employee benefits, etc. Take-home pay after deductions will be less.