Hourly to Salary Calculator
Calculate your equivalent annual salary for an hourly wage using the calculator below.
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How to Convert Hourly Pay to Annual Salary
There are many different variables you’ll need to consider when exploring job options. In addition to thinking about how much you’ll get paid, it will also be important to consider how and when your pay will be calculated.
Generally speaking, most employee compensation plans will fall into one of two different categories: hourly pay or annual salary. With an hourly pay plan, your compensation will be directly determined by the number of hours that you work.
Typically, these payment plans will come with a pre-agreed hourly rate and sometimes offer the potential for additional pay, such as overtime hours and tips. Hourly pay plans are often tracked using time sheets.
With an annual salary, your compensation package will be determined in dollars per year. In some cases, there might be some “built-in” assumptions to these plans, such as the assumption you will work about 40 hours every week and will be allowed a certain number of vacation days.
In general, hourly pay contracts are more common for manual labor and annual salary contracts are more common for office work. Of course, there are exceptions to these general rules. Nevertheless, you might be wondering how to compare hourly wages to an annual salary.
Let’s take a closer look.
Steps to Convert Hourly Wage to a Salary
Converting an hourly wage to an annual salary is actually pretty easy. First, you will need to determine your hourly wage. If the wage is variable (bonuses, tips, overtime pay, holiday pay, etc.), you’ll have to make some adjustments to your final calculation.
But if your wage is universal (the same no matter what), the next thing you will need to determine is the average number of hours you work in a week.
A lot of people work 40 hours per week, but if you take two weeks off each year, then the average amount of hours you work per week will be slightly less than 40.
Noting there are (approximately) 52 weeks in a year, you can then use the formula below.
Hourly to Salary Formula
annual salary = hourly wage × hours per week × 52
This figure indicates how much money an hourly employee is making annually. (This formula assumes the hourly wage is not affected by overtime, tips, etc.) Here is an example of how to convert hourly wages into an annual salary.
For example, let’s suppose that your current hourly salary is $30 per hour and, accounting for the days you take off throughout the year, you typically work 35 hours per week.
Considering there are 52 weeks (and one day, which we’ll round off) in a year, you can then plug these figures in below:
annual salary = $30 × 35 × 52
annual salary = $54,600
Now you know what your annual salary would be if you worked 35 hours per week at $30 per hour. However, it is important to remember that this is a very simplified formula.
Many things can cause your hourly salary to change, such as tips, bonuses, holiday and overtime pay, and more. There also might be “non-cash” components of your salary, such as health insurance, retirement benefits, and more.
These non-cash components still have a very real financial value (after all, if you aren’t getting health insurance from your employer, you’d have to pay for it on your own).
So each component should be accounted for when comparing different compensation packages.
Regardless, at the very least, knowing how to convert hourly wages into an annual salary (and vice versa) can be very beneficial in the negotiating process.
Pros and Cons of Hourly Pay
One of the clearest benefits of hourly pay is that if you work more, you will get paid more. These simple pay structures will directly compensate you for the amount of time that you work.
At the same time, the average hourly rate is lower than the average salary (though this is only partially because of the wage structure). Hourly pay can also create gaps in your pay, which can be frustrating if you take time off for vacation.
Pros and Cons of Annual Salary
With an annual salary, you’ll have a more consistent payment structure that makes long-term financial planning considerably easier. Additionally, salary pay is usually easier to use when negotiating and comparing different offers.
Salary employees are also more likely to have greater non-cash compensations and these jobs may be more secure.
On the other hand, many salary employees end up working more than they originally planned. If you are salaried, you’ll likely find yourself at least occasionally working late (or on the weekends) without any additional compensation.
Which One is Right for You?
When comparing jobs, look at your entire compensation package. How much money will you earn in the next year and what other benefits are being offered?
If you can assign a cash value to these benefits, the comparison will be even easier. In some cases, this means the hourly job will be best; in others, an annual salary might be better.
You might also be interested in our salary to hourly pay calculator.