Hourly to Salary

Salary vs. Hourly: What's the Difference?

A salary is a fixed rate a full-time employee earns regardless of how many hours they work each week. On the other hand, an hourly rate is a set amount of money an employee earns for each hour worked.

Generally, hourly employees are classified differently from salaried employees under the Fair Labor Standards Act (FLSA). Meaning, "non-exempt" hourly employees are entitled to overtime pay at a rate of 1.5 times their hourly rate for every hour that exceeds a standard 40-hour workweek. “Exempt" salaried employees earn a consistent paycheck, whether they work less than or more than 40 hours per week.

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How to Convert an Hourly Rate to Salary

To determine how much your yearly salary is based on your hourly rate, use the following formula:

Hourly Rate x Hours Worked per Week x 52 Weeks in a Year = Annual Salary

Hourly to Salary Examples

The following examples are based on a standard 40-hour workweek:

How to Calculate Hourly Rate from Salary

Conversely, to determine how much your hourly rate is based on your annual salary, follow this formula:

(Hours Worked per Day x Number of Days Worked per Year) / Annual Salary = Hourly Rate

Let's say you work eight hours a day for 240 days a year—that’s 1,920 hours. If your annual salary is $57,600, divide this number by 1,920 hours to find your hourly wage ($30 per hour).

However, if you consistently work 40 hours per week, you can do a quicker, one-step calculation. Simply divide your annual salary by 2,080 hours ($40 hours x 52 weeks) like this:

$57,600 / 2,080 hours = $27.69 an hour

Salary to Hourly Examples

In the following examples, the salary-to-hourly calculations are based on a standard 40-hour workweek:

Is Salary Better than Hourly?

Both salary and hourly pay have distinct benefits and disadvantages, so what works best for you depends on your lifestyle preferences and needs. For example, if you don't have access to health insurance through either a parent or spouse, you may prefer a role that offers salary pay and likely a more comprehensive benefits package.

On the other hand, if you prefer a more flexible schedule, a job with hourly pay may be more appealing. In this case, your employer cannot expect you to work overtime without time-and-a-half compensation.

Remember, whether you convert from hourly to salary or salary to hourly, these figures represent gross income. This is your income before any payroll deductions are made for taxes, employee health insurance, etc. Your take-home pay after deductions will be less.

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