Hourly to Salary Calculator

Converting between hourly wages and annual salaries is essential for comparing job offers, negotiating compensation, and understanding your true earning potential. While the basic math seems straightforward, accurately accounting for hours worked, overtime, benefits, and paid time off reveals significant differences between seemingly equivalent positions. Whether you're evaluating a career transition, comparing opportunities, or simply understanding what your time is worth, mastering hourly-to-salary conversions ensures you make informed decisions about your financial future.

Hourly vs. Salary: Beyond the Numbers

Financial considerations aside, hourly and salaried positions have structural differences affecting work-life balance, income predictability, and legal protections.

Overtime protection favors hourly non-exempt employees who must be paid for every hour worked beyond 40 weekly. Salaried exempt employees receive the same pay regardless of hours worked, meaning 50-hour weeks yield no additional compensation. However, hourly employees may be sent home when business is slow, reducing income, while salaried employees receive consistent paychecks.

Income predictability differs substantially. Salaried positions provide the same paycheck every period, simplifying budgeting and financial planning. Hourly positions create variable income depending on hours worked and overtime availability. Some people prefer the stability of salary while others appreciate the opportunity to increase earnings through additional hours.

Exempt vs. non-exempt status determines overtime eligibility and other protections. The Fair Labor Standards Act (FLSA) requires employers to pay overtime to non-exempt employees, typically hourly workers. Exempt employees, usually salaried professionals earning above specific thresholds ($684 per week or $35,568 annually as of 2024) in executive, administrative, or professional roles, don't receive overtime pay.

Flexibility often differs between classifications. Hourly employees typically punch time clocks and have fixed schedules, while salaried employees may have more flexibility to manage their own schedules. However, this cuts both ways—salaried employees may be expected to work evenings and weekends without additional compensation.

Career trajectory sometimes favors salaried positions for advancement into management and executive roles, though this varies by industry. Some companies only promote from salaried ranks, while others promote top performers regardless of classification.

The Basic Conversion Formula

The standard conversion between hourly wages and annual salary assumes a full-time schedule of 40 hours per week for 52 weeks per year, totaling 2,080 hours annually. Multiply an hourly rate by 2,080 to get the annual salary equivalent, or divide an annual salary by 2,080 to get the hourly rate.

An employee earning $25 per hour working full-time earns approximately $52,000 annually ($25 × 2,080 hours). Conversely, a $60,000 annual salary converts to about $28.85 per hour ($60,000 / 2,080 hours). These calculations provide baseline comparisons for evaluating compensation packages.

However, this simple formula makes assumptions that don't always hold true. Many salaried positions expect more than 40 hours weekly, while hourly positions may not guarantee full-time hours. A salaried manager working 50 hours weekly effectively earns a lower hourly rate than the calculation suggests, while an hourly employee consistently working 35 hours weekly earns less annually than the formula indicates.

To calculate more precisely based on actual hours, adjust the annual hour total. Someone working 45 hours weekly for 50 weeks (accounting for two weeks unpaid time off) works 2,250 hours annually. At $25 per hour, this yields $56,250 annually, not $52,000. Conversely, a $60,000 salary for someone working these hours represents $26.67 per hour ($60,000 / 2,250), not $28.85.

The conversion also differs when accounting for paid time off. Salaried employees typically receive paid vacation, sick days, and holidays, effectively earning their salary for fewer hours of actual work. If an employee receives three weeks (15 days) of paid time off plus 10 holidays, they're paid for 2,080 hours but work only 1,880 hours (2,080 - 200). Their effective hourly rate is higher than the simple calculation suggests.

Negotiating Based on Hourly-Salary Equivalents

Understanding conversions strengthens your negotiation position whether discussing hourly wages or annual salaries.

When a hiring manager offers $50,000 and you want $55,000, frame it as an hourly difference: "The gap between us is about $2.40 per hour ($5,000 / 2,080). Given my experience and the value I'll bring, I believe that additional $2.40 per hour is justified." This makes the difference seem smaller and more reasonable.

If you're currently hourly at $27 per hour (about $56,160 annually) and interviewing for a salaried role, state your current compensation in whichever format sounds more impressive while being truthful. "$27 per hour" sounds different than "$56,000 annually," though they're equivalent. Use whichever framing supports your negotiation.

When employers try to lowball by switching between hourly and annual figures, convert to make fair comparisons. An offer of "$24 per hour" for a role you know others are salaried at $52,000 sounds competitive, but $24 per hour is only $49,920 annually, about 4% below market.

Calculate the hourly rate of benefits when negotiating. If an employer can't meet your salary target but offers excellent benefits, quantify the value: "While the base salary of $58,000 is below my target, with the health insurance, 401(k) match, and generous PTO, the total compensation package of approximately $72,000 meets my requirements."

Understanding hourly-to-salary conversions, accounting for overtime and benefits, and recognizing structural differences between employment types empowers you to accurately evaluate opportunities, negotiate effectively, and make career decisions based on complete financial information rather than misleading headline numbers.

Accounting for Overtime in Hourly Positions

Overtime significantly impacts the annual earnings of hourly employees, making positions with regular overtime opportunities more valuable than straight-time positions with the same base rate.

Overtime pay at time-and-a-half means hours beyond 40 weekly earn 1.5 times the regular rate. An employee earning $20 per hour receives $30 per hour for overtime hours. Working 45 hours weekly (40 regular + 5 overtime) yields weekly gross pay of $950 ((40 × $20) + (5 × $30)), or $49,400 annually (assuming 52 weeks).

Compare this to a salaried position at $50,000. The hourly position with regular overtime provides similar annual earnings despite a lower base rate. However, overtime isn't guaranteed, creating income variability. Calculate your expected annual earnings using realistic overtime estimates rather than assuming maximum overtime every week.

Some industries regularly provide overtime while others rarely do. Manufacturing and healthcare often offer consistent overtime opportunities, while retail and service industries may restrict hours to avoid overtime costs. When evaluating hourly positions, ask about typical overtime availability and whether it's mandatory or voluntary.

Double-time for holidays or specific circumstances further increases hourly earning potential. An employee earning $22 per hour who works 8 hours on six holidays at double-time earns an extra $1,056 annually (6 days × 8 hours × $22). Factor these premiums into total compensation calculations when they're regularly available.

California and some other states require overtime pay for hours exceeding 8 in a single day, even if weekly hours don't exceed 40. An employee working four 10-hour days (40 total) earns 8 hours of overtime under California law. Understand state-specific overtime rules when calculating earning potential.

The Real Value of Benefits

Benefits represent a significant component of total compensation that simple hourly-to-salary conversions ignore. Comparing positions requires quantifying benefit value to understand true compensation differences.

Health insurance provided by employers typically costs $7,000-$12,000 annually for individual coverage and $18,000-$25,000 for family coverage, though employees only see their premium contribution (if any) deducted from paychecks. If an employer pays $8,000 annually for your health insurance, that's equivalent to $3.85 per hour in additional compensation ($8,000 / 2,080 hours).

A $50,000 salary with full health insurance coverage is worth more than a $53,000 salary where you pay $4,000 annually in premiums. Calculate total compensation including the value of employer-provided benefits: $50,000 + $8,000 (employer health contribution) = $58,000 total value versus $53,000 + $4,000 (employer health contribution) = $57,000.

Retirement benefits like 401(k) matching add substantial value. An employer matching 50% of contributions up to 6% of salary provides up to 3% of salary in free money. On a $55,000 salary, this match could be worth $1,650 annually if you contribute enough to receive the full match. That's equivalent to another $0.79 per hour.

Paid time off has measurable value that benefits salaried employees more than hourly workers who typically don't get paid when not working. If a salaried position includes three weeks (15 days) of vacation plus 10 holidays, you're paid for 25 days you don't work. At a $60,000 salary, those 25 days are worth $5,769 ($60,000 / 52 weeks × 5 days/week = $230.77 per day × 25 days).

Calculate total compensation by adding base pay, employer health insurance contributions, retirement matching, and the value of paid time off. A $55,000 salary with $8,000 in health benefits, $1,650 in 401(k) matching, and $5,000 in paid time off value totals $69,650 in total compensation, equivalent to $33.49 per hour of total value.

Making the Transition: What to Consider

When switching from hourly to salary or vice versa, several factors beyond the numbers deserve consideration.

If transitioning from hourly to salary, carefully evaluate the actual hours expected. A $65,000 salary seems attractive compared to $28 per hour ($58,240 annually), but if the salaried position requires 50 hours weekly while the hourly position was 40 hours, the effective hourly rate drops to $25 ($65,000 / 2,600 hours). You're working 25% more hours for only 11.6% more total pay.

Ask directly about expected hours during interviews for salaried positions. Request to speak with current employees in similar roles about their typical schedules. A "standard 9-to-5" job that actually runs 8am-6pm or requires regular evening email checking changes the compensation equation significantly.

Calculate your break-even point when comparing offers. If you currently earn $30 per hour working 40 hours weekly with regular 5-hour overtime ($49,400 annually), you need a salary of at least $50,000-$52,000 to maintain equivalent income without the overtime opportunity, and more if the salaried position requires longer hours.

Consider your personal work style and financial needs. If you value predictable income and don't mind potentially working beyond 40 hours, salary might suit you. If you prefer clear boundaries between work and personal time and want compensation for every hour worked, hourly might be preferable.

Transitioning from salary to hourly sometimes indicates a backward career move, but this isn't always true. Some high-skilled hourly positions like specialized technicians or skilled trades pay more than entry or mid-level salaried positions. Evaluate the specific opportunity rather than assuming salary is always superior.