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Convert hourly wage to annual salary, or calculate unadjusted gross pay across pay frequencies.
Converting between hourly, weekly, monthly and annual pay
Comparing an hourly rate with an annual salary is harder than it looks, because the two hide different things. An hourly rate ignores unpaid time off and usually comes without benefits. A salary ignores the hours actually worked. The conversion is simple arithmetic; the comparison needs a little more care.
The arithmetic
annual = hourly × hours per week × weeks worked per year
The standard full-time assumption is 40 hours over 52 weeks, which gives 2,080 hours a year. That is the convention behind the familiar shortcut: double the hourly rate and add three zeros, and $25 an hour becomes roughly $50,000.
| Hourly | Weekly | Monthly | Annual |
|---|---|---|---|
| $18 | $720 | $3,120 | $37,440 |
| $25 | $1,000 | $4,333 | $52,000 |
| $35 | $1,400 | $6,067 | $72,800 |
| $50 | $2,000 | $8,667 | $104,000 |
| $75 | $3,000 | $13,000 | $156,000 |
Monthly pay is annual divided by twelve, not weekly multiplied by four. Four weeks is 48 weeks a year, which understates monthly pay by about 8%. The correct conversion is weekly × 52 / 12, so a $1,000 week is $4,333 a month, not $4,000.
Adjusted versus unadjusted
The 2,080-hour figure assumes you are paid for every week of the year. For salaried employees that is usually true, because holiday is paid. For hourly or contract workers it is not: two weeks of unpaid leave and ten public holidays bring the paid year down to about 1,960 hours.
That matters when comparing an offer. A $50/hour contract at 1,960 paid hours is $98,000, not $104,000, and the salaried job paying $100,000 with paid holiday is the better one on cash alone before benefits enter the picture.
What a salary is worth beyond the salary
Employer contributions are real money and are routinely left out of comparisons:
- Retirement match. A 5% match on a $70,000 salary is $3,500 a year, and it is an immediate 100% return on your own contribution.
- Health insurance. Employer-paid premiums can be worth $6,000 to $20,000 a year for family cover in the US.
- Paid leave. Twenty days of holiday plus ten public holidays is six weeks, roughly 11.5% of the year.
- Payroll taxes. Self-employed and contract workers pay both halves of social insurance, which is often an extra 7% to 8% of income.
A reasonable rule when comparing a contract rate against a salary: the contract needs to be roughly 25% to 35% higher to be equivalent, more if the salaried role has strong benefits.
Overtime
Where overtime is paid at 1.5×, each extra hour is worth more than the base rate suggests. At $25 an hour, five overtime hours a week add $187.50 weekly, $9,750 a year, which is a 19% uplift on base pay. Whether it is sustainable is a different question; the calculator will tell you what it is worth, not whether it is worth it.
A worked example
An offer of $31 an hour, 37.5 hours a week, with 15 days of paid holiday and 9 public holidays. Paid weeks: 52. Annual gross: 31 × 37.5 × 52 = $60,450. A competing salaried offer of $62,000 with a 4% retirement match is worth $64,480 in total compensation, and comes with fewer hours worked per week. The hourly job needs about $33.10 an hour to match it.
Frequently Asked Questions (FAQs)
How many work hours are in a year?
2,080 for a standard 40-hour week across 52 weeks. Subtracting two weeks of unpaid leave gives 2,000, and subtracting public holidays as well lands around 1,960. Which figure to use depends on whether your time off is paid.
Is this gross or net pay?
Gross, before tax and deductions. For take-home pay, run the gross figure through the income tax calculator, and remember that social insurance, pension contributions and health premiums come out as well.
How do I compare a contract rate with a salary?
Add the value of benefits to the salary and subtract self-employment costs from the contract. In practice a contractor needs roughly 25% to 35% more than the equivalent salary to break even once unpaid leave, both halves of payroll tax, insurance and periods without work are counted.
What is the difference between salary and total compensation?
Salary is cash pay. Total compensation adds the retirement match, insurance premiums the employer pays, bonuses, equity and any allowances. Two jobs with identical salaries can differ by $20,000 a year in total compensation.
How do I convert a monthly salary to hourly?
Multiply the monthly figure by 12 to get the annual, then divide by your annual hours. A $5,000 month is $60,000 a year, which over 2,080 hours is $28.85 an hour. Dividing the monthly figure by 160 gives a similar answer and is the quick version.
Should I negotiate salary or benefits?
Salary compounds: it sets the base for future rises and for your next job's offer. Benefits usually do not. If only one is negotiable, take the salary, with the exception of a retirement match, which is cash with an immediate guaranteed return.