Hourly to Salary: A Guide to Converting Pay Types

When applying for a job, you might notice that some roles pay you by the hour while others offer an annual salary. As you consider your compensation offers, it can be challenging to assess which will yield the highest income. Thankfully, you can compare earnings over time using an hourly-to-salary converter.

While a converter will provide a direct earning comparison, you may want to factor in other differences between hourly wages and annual salaries, including overtime eligibility, employer benefits, and job security. Find out more about each payment method, popular tools for conversion between the two, and the pros and cons of each.

What's the difference between an hourly wage and a salary?

An hourly wage and a salary are two different ways an employer pays you. If you receive hourly pay, you'll be paid at a set rate for each hour you work. Getting paid hourly means your hours may vary weekly, earning a variable amount and potentially working overtime. Employers must comply with minimum wage laws. These may vary from state to state, but the national minimum wage in the US is $7.25 per hour [1]. 

A salary is a fixed income calculated based on a set number of hours worked over a year, divided into monthly or weekly payments. Your experience level, education, industry, and time in service generally determine salaries. 

Tools to convert hourly to salary

When comparing total pay, you can use several conversion tools to see the equivalent hourly rate of your salary or the salary equivalent of your hourly rate. Some options include the following:

• Indeed Hourly to Salary Calculator 

• Omni Calculator 

• CalcXML

• ADP Hourly Paycheck Calculator

• Talent.com Annual / Monthly/ Weekly/ Hourly Converter

Hourly wage

An hourly wage is the amount of money you make per hour of work. To determine your projected or owed pay, multiply the hours worked by your hourly rate. It is common in temporary, minimum-wage, and freelance jobs. 

Hourly contracts are standard in the US. According to the most recent data from the US Bureau of Labor Statistics (BLS), 55.7 percent of all workers were paid hourly in 2023 [2].

Pros of an hourly wage

If you’re deciding whether to accept an hourly wage or negotiate a salaried position, you should carefully consider the advantages and disadvantages that make this payment structure unique. Working on an hourly wage contract provides several benefits, making it an attractive option for many workers.

Some of the pros include:

• Paid for every hour worked: When you work based on an hourly wage payment structure, your employer pays you for your time without an expectation to work unpaid overtime. 

• Option to work overtime: Your employer must pay you overtime if you work more than 40 hours a week or during the holidays. Legal guidelines require this figure to be 1.5 times your standard hourly wage unless otherwise stated in your contract. In some cases, your employer may even pay double. 

• Work–life balance: Working at an hourly rate means you have a specific work period, and generally, your employer doesn’t expect you to work late. In some cases, you can pick your shifts or decide how much you work per week. This flexibility allows you to build your schedule to allow time for personal pursuits.

Cons of an hourly wage

Along with many benefits, you’ll also find a few downsides of hourly pay compared to its salary counterpart. A few drawbacks of working for an hourly wage include the following:

• Less job security: If your employer needs to reduce employee hours, or worse, to let staff go, someone in an hourly rate role has less security than someone on an annual salary. In many cases, employees choose to make reductions to hourly schedules rather than let salaried employees go. 

• Lost pay for missed hours: If you work hourly and need to take time off for an appointment or event, you’ll likely lose the income for that period. Generally, you don’t get paid if you don’t work. In contrast, salaried employees generally have paid personal hours they can use for appointments or sick days.

• No health insurance: Depending on your contract, workers on an hourly rate often have to cover their own health insurance costs. Regulations generally don’t require employers to offer health insurance to employees working under 30 hours per week. If the company has under 50 employees, employers may not be required to provide hourly workers with health insurance.

Annual salary

Being paid an annual salary means you receive a predetermined yearly payment divided into monthly or weekly amounts, which employers can prorate for part-time positions. Annual salaries typically accompany permanent positions, full-time jobs, and roles seen as career options. These roles generally come with more responsibilities than an hourly position. 

Pros of a salary

A salaried role has many benefits, including job security, health insurance, and bonuses. You might choose a salaried position for advantages like the following:

• Consistent payments: A job with an annual salary means you know exactly what your employer pays you each month, regardless of your hours. This amount generally includes paid personal time for vacations, appointments, and sick days.

• Career advancement opportunities: People in salaried jobs are usually on a pay scale with room for promotion based on experience and time within a company. Typically, salaried positions include more responsibilities and employees in these positions may be offered promotions before their hourly counterparts. 

• More comprehensive benefits: Workers on an annual salary tend to have better benefits included in their contracts, such as health care, flexible work hours, paid vacation, and retirement investments. Salaries employees also have more job security than hourly employees, as hourly employees are usually the first to be let go or have hours reduced.

Cons of a salary

While salaried jobs have various benefits, these roles can also have some cons to consider. To decide which is right for you, consider what you value most in your position and what you’re willing to overlook. Some disadvantages of a salaried position compared to hourly pay include:

• No overtime: Unlike hourly wage employees, who receive compensation for extra hours, employers may expect salaried employees to work above their hours to finish a project, often without additional pay. In some cases, hourly employees can make more than salaried employees for the actual hours worked, especially when factoring in overtime or holiday pay.

• Work–life balance: Depending on your organization and industry, you may have rigid requirements for your office hours. Having a set schedule without the capacity to reduce hours can make it challenging to balance personal commitments or adjust your schedule around other lifestyle factors.  

Next Steps 

Hourly and salary pay structures are two common ways employers pay employees for their work. While hourly wages offer flexible hours and overtime pay, salaried positions often provide more benefits and job security. To decide the proper pay, you should carefully consider what factors you prioritize, including career progression, benefits outside of pay, and work-life balance. 

On Coursera, you can find many high-quality courses to enhance your earning potential, whether you are looking for hourly or salaried positions. If you’re currently working with computers, you may want to try Cybersecurity for Everyone through the University of Maryland. The career certificate program includes learning about threat actors and the hacking process by cybersecurity threats.

If you’re interested in a managerial role, consider completing the Google Project Management: Professional Certificate on Coursera. Through this course, you can learn project management skills, including proper documentation and strategic communications.