Side-by-side comparison
| Aspect | Hourly | Salary |
|---|---|---|
| Pay structure | Per hour worked | Fixed per pay period |
| Overtime eligible (FLSA) | Almost always | Only if non-exempt |
| Income predictability | Varies week to week | Stable, easy to budget |
| Time tracking | Required | Often optional |
| Benefits | Varies by employer | Often more comprehensive |
| Common roles | Retail, hospitality, trades | Office, professional, management |
Salary to hourly conversion
Hourly rate = Annual salary ÷ (weeks per year × hours per week)
For a $60,000 salary at 40 hours per week, 52 weeks per year:
$60,000 ÷ (52 × 40) = $60,000 ÷ 2,080 = $28.85/hour
| Annual salary | Hourly @ 40h/wk | Hourly @ 35h/wk |
|---|---|---|
| $40,000 | $19.23 | $21.98 |
| $50,000 | $24.04 | $27.47 |
| $60,000 | $28.85 | $32.97 |
| $75,000 | $36.06 | $41.21 |
| $100,000 | $48.08 | $54.95 |
Hourly to salary conversion
Annual salary = Hourly rate × hours per week × weeks per year
For $30/hour at 40 hours per week:
$30 × 40 × 52 = $62,400/year
Where the comparison gets tricky
- Unpaid overtime. Exempt salaried employees often work over 40 hours without extra pay, making the effective hourly rate lower.
- Paid time off. Salary usually includes paid holidays and PTO; hourly may not.
- Benefits gap. Health insurance, retirement matching, and bonuses are often more generous for salaried roles.
- Schedule predictability. Hourly schedules can shift week to week, affecting income.
Worked example: which pays more?
Job A: $25/hour with consistent 45-hour weeks (5 hours OT each week).
- Regular: 40 × $25 × 52 = $52,000
- Overtime: 5 × $37.50 × 52 = $9,750
- Total: $61,750/year
Job B: $58,000 salary, exempt, typically 45 hours per week.
Effective hourly: $58,000 ÷ (45 × 52) = $24.79/hour. Job A pays more in cash for the same hours.
Tax and benefit differences in plain language
Both hourly and salaried employees pay federal income tax, Social Security, and Medicare. The difference shows up in withholding behaviour. Salaried employees usually have steady withholding because the gross is consistent. Hourly employees can see withholding swing if a paycheck includes overtime or a slow week. The yearly tax bill is similar for the same total income, but the cash flow inside the year is smoother for salaried roles.
Benefits often tilt toward salaried positions. Health insurance, paid holidays, paid time off, retirement matching, parental leave, and tuition assistance show up more often in salaried offers. Hourly roles can match these benefits, especially in unionised workplaces or companies with strong hourly programs, but on average the salaried package is broader.
Effective hourly rate for salaried employees
Take your annual salary, divide by 52 weeks, then divide by typical hours worked per week. A $70,000 salary at a steady 50-hour-per-week pace gives an effective rate of $70,000 / 52 / 50 = $26.92/hour. The same salary at 40 hours per week gives $33.65/hour. The hours number matters more than the headline salary.
When to push back on a salary offer
If a salaried role typically requires more than 45 hours per week, model the effective hourly rate before accepting. If a comparable hourly role with overtime would clear the same total, the salary is not really paying more. Ask about typical workload, on-call expectations, and how busy seasons are handled. The difference between a $65,000 salary at 40 hours and the same salary at 55 hours is a 38% pay cut on a per-hour basis.
Switching between the two
Many people move between hourly and salaried roles during a career. Use the Salary to Hourly Calculator when you receive a salary offer and want to compare with your current hourly rate. Use the Hourly to Salary Calculator when you want to set a salary expectation that protects your typical overtime earnings.
Important note
Exempt vs non-exempt classification is a legal determination based on duties and salary tests. Pay structure decisions involve more than just the hourly rate. Confirm classification and pay specifics with your employer or HR department.