Hourly or Salaried? How to Compare Two Job Offers Fairly
A job that pays $24 an hour and a job that pays $52,000 a year cannot be compared directly, because they are quoted in different units. The hourly offer states the price of one hour of work. The salary states a price for a year, without saying how many hours that year contains.
This guide shows how to convert in both directions, why the number of hours and the amount of paid time off change the answer, and how to line up two offers using the same assumptions. All figures are before tax.
Converting between hourly and annual pay
The standard shortcut assumes a full-time year of 40 hours a week for 52 weeks, which is 2,080 hours. Multiply the hourly rate by the hours to get a yearly figure, or divide a salary by the same hours to get a rate.
annual pay = hourly rate × hours per week × weeks paid per yearDivide the annual figure by the same hours to go the other way.
Worked example: $24 an hour for 2,080 hours is 24 × 2,080 = $49,920 a year. A salary of $52,000 divided by 2,080 is $25.00 an hour. On paper the salary leads by $1 an hour, but that result depends on assumptions the next sections test.
How many hours does the salary really cover?
A salary is normally a fixed amount whether you work 38 hours in a week or 48. The $25.00 figure above is only true if you really work 40 hours. If the role regularly runs to 45 hours, the same $52,000 is spread over 45 × 52 = 2,340 hours, and each hour is worth 52,000 ÷ 2,340 = $22.22. Now the hourly job's $24 is the better rate.
Hourly pay behaves differently. Extra hours are usually paid, and in many places hours beyond a weekly threshold earn a premium. Our guide to how overtime pay is calculated walks through the arithmetic.
Paid time off and holidays
Hourly workers are often paid only for hours they work, so a week away can mean a week without income unless the contract says otherwise. Salaried roles more often include paid vacation and public holidays. Those paid days are part of the compensation, and they also reduce the days you actually spend working.
Suppose the salaried job includes 15 vacation days and 10 public holidays. A year has 52 × 5 = 260 weekdays, so you work 260 − 25 = 235 days. At 8 hours a day that is 1,880 hours, and 52,000 ÷ 1,880 = $27.66 for every hour you are at work. If the days are 9 hours long, the figure falls to 52,000 ÷ 2,115 = $24.59.
| What you count | Hours in the year | $52,000 per hour |
|---|---|---|
| 40 h/week × 52 weeks | 2,080 | $25.00 |
| 45 h/week × 52 weeks | 2,340 | $22.22 |
| 8 h/day × 235 working days | 1,880 | $27.66 |
| 9 h/day × 235 working days | 2,115 | $24.59 |
The same salary spans roughly $22 to $28 an hour depending on the assumptions, a far wider gap than the $1 that started the comparison. For contrast, if the hourly job gives you the same 25 days off unpaid, it pays 24 × 1,880 = $45,120 for the year.
Other parts of an offer worth pricing
- Overtime rules. Whether extra hours earn a premium depends on the role, the contract and local law. Salaried staff are covered in some cases and not in others.
- Benefits. Employer contributions to health insurance or a retirement plan have a cash value. If one employer pays $3,000 more a year toward them, that is about 3,000 ÷ 2,080 = $1.44 an hour.
- Schedule stability. Hourly hours can vary week to week, while a salary is predictable. Predictability has value even if it is hard to price.
- Unpaid time. An unpaid commute, on-call periods or required unpaid breaks all lower the value of each hour you give.
A fair side-by-side method
- Write down the hours per week each job realistically needs, including regular extra time.
- Count the paid and unpaid days off you expect to take in a year.
- Work out annual cash pay for each, then divide by the hours you actually work.
- Add the yearly value of benefits to both offers.
- Compare per hour and per year, then weigh what the numbers cannot show: flexibility, growth and commute.
The salary to hourly calculator covers steps 1 to 3 in one pass, with fields for weekly hours, holidays and vacation, and the hourly to salary calculator goes the other way. If you are the one setting a rate, as a freelancer would be, see how to set an hourly rate from an income goal.
These examples are illustrations, are before tax, and are not financial, employment or legal advice. Check the terms of your own contract.
- Salary to Hourly Calculator: Enter what you earn, how often you are paid and how much time you really work, and the calculator returns the equivalent hourly, daily, weekly, monthly and yearly figures.
- Hourly to Salary Calculator: Type in your hourly rate and your usual schedule. The calculator turns it into yearly, monthly, weekly and daily pay, taking unpaid holidays and vacation days off the total.
This article is general information, not professional advice. See our Disclaimer and Editorial Policy.
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