Salary versus hourly: the honest comparison
An hourly rate is a price per unit. A salary is a fixed amount for an unspecified number of units. That asymmetry is the entire trade, and it runs in the employer's favour whenever hours run long.
The conversion
A $75,000 salary on a 2,080-hour year is $36.06 an hour. That is the number employers quote. But 2,080 assumes 40 hours a week with no unpaid overtime, and a great many salaried roles run 45 to 55 hours.
| Salary | Hours a week assumed | Effective hourly |
|---|---|---|
| $75,000 | 40 | $36.06 |
| $75,000 | 45 | $32.05 |
| $75,000 | 50 | $28.85 |
| $75,000 | 55 | $26.22 |
The same salary is worth 27 per cent less per hour at 50 hours than at 40. Against an hourly job at $32, the salary is a pay cut at 45 hours and a substantial one at 50, before the loss of overtime.
Three questions with an hourly offer
- Is overtime guaranteed at one and a half times, or is it capped at the schedule?
- Are hours stable or seasonal, and what happens in a slow month?
- Is there paid leave, and does the hourly rate apply to it?
Three with a salary offer
- Are you exempt, and if so, what hours does the job actually run?
- Is the salary above the exempt threshold, or will you be salaried and still owed overtime?
- What is the bonus, and is it discretionary or formulaic? A non-discretionary bonus also lifts the overtime regular rate if you turn out not to be exempt.
Where hourly wins outright
High-hour roles win on hourly almost every time, because the overtime premium compounds on every extra hour. Controls roles with on-call rotations, seasonal logistics and facilities work are the classic cases where an hourly seat outperforms a salaried one on total pay, and where the promotion to a fixed salary is often a real reduction.