Hourly to Salary Calculator

Understanding Hourly vs. Salary Pay: A Complete Guide

When evaluating job offers or planning your career path, understanding the difference between hourly and salaried positions is crucial. Our hourly to salary calculator helps you make informed decisions about your compensation.

What is an Hourly Wage?

An hourly wage is compensation based on the actual number of hours worked. Employees are paid for each hour they work, and often receive overtime pay (usually 1.5 times the regular rate) for hours worked beyond the standard 40-hour workweek.

What is a Salary?

A salary is a fixed regular payment, typically expressed as an annual amount but paid in monthly, bi-weekly, or weekly installments. Salaried employees generally receive the same amount each pay period, regardless of how many hours they work.

How to Convert Hourly to Salary

The basic formula for converting hourly wage to annual salary is:

Annual Salary = Hourly Wage × Hours per Week × Weeks per Year

The standard calculation uses 52 weeks per year, but you should subtract any unpaid vacation time. For example, if you earn $20 per hour, work 40 hours per week, and take 2 weeks of unpaid vacation:

$20 × 40 hours × 50 weeks = $40,000 annual salary

Considering Overtime in Calculations

If you regularly work overtime, your actual annual earnings may be higher than a simple calculation would suggest. Overtime is typically paid at 1.5 times your regular hourly rate (time and a half). Our calculator factors in these variables to give you a more accurate picture.

Benefits and Drawbacks of Each Payment Method

Hourly Advantages: Overtime pay, clear compensation for all hours worked, easier to calculate.

Hourly Disadvantages: Income may fluctuate, often fewer benefits.

Salary Advantages: Predictable income, often comes with benefits, paid time off.

Salary Disadvantages: May work more than 40 hours without additional pay.