Hourly vs Salary — Which Pays More?

“$28 an hour” and “$55,000 a year” sound like two different languages, and that’s exactly the problem when you’re weighing job offers. Converting them is easy; comparing them fairly takes a little more thought. Here’s how.

The basic conversion

A full-time US schedule is 40 hours × 52 weeks = 2,080 hours a year. So:

• Hourly → annual: multiply by 2,080. $28/hr ≈ $58,240.
• Annual → hourly: divide by 2,080. $55,000 ≈ $26.44/hr.

Quick mental version: double the hourly rate and add three zeros. $28 → $56,000 — close enough for a first look. The salary calculator gives the exact figure for any hours-per-week and weeks-per-year combination, with weekly, bi-weekly and monthly breakdowns.

Where the simple conversion breaks

Paid time off. A salaried employee with three weeks of vacation and ten holidays is paid for 52 weeks but works about 47. An hourly employee with no paid leave who takes the same time off is paid for 47 weeks. On the same “annual equivalent,” the hourly worker earns about 10% less. Always ask whether leave is paid.

Overtime. In the US, most hourly workers are non-exempt under the Fair Labor Standards Act and must be paid 1.5× their rate beyond 40 hours in a week. Most salaried workers above the exemption threshold get nothing for extra hours. If a job routinely runs 45–50 hours, an hourly rate can be worth 15–25% more than the equivalent salary — or, seen from the other side, a salary can hide a lot of unpaid work.

Benefits. Employer health insurance, retirement matching, and paid sick leave typically add 20–30% to the value of a salaried package. Hourly and contract roles vary from full benefits to none. A $58,000 hourly job with no benefits may be worth less than a $52,000 salary with good ones.

Variable hours. Hourly pay is only as reliable as the schedule. Retail, hospitality and gig work often average well below 40 hours; a “$20/hr” job that delivers 28 hours a week is a $29,000 job, not a $41,600 one.

Worked example

Offer A: $28/hr, 40 hrs/week, no paid leave, no benefits, occasional overtime (say 3 hrs/week on average). Offer B: $55,000 salary, 40 hrs/week, 15 days paid leave + 10 holidays, health insurance worth ~$6,000/yr, 4% 401(k) match.

	Offer A (hourly)	Offer B (salary)
Base pay	$58,240	$55,000
Unpaid leave (25 days)	−$5,600	$0
Overtime (3 hrs/wk × 1.5 × 47 wks)	+$5,922	$0
Health insurance value	$0	+$6,000
401(k) match	$0	+$2,200
Total value	$58,562	$63,200

The “higher” hourly offer is worth about $4,600 less once everything is counted. Reverse the assumptions — plenty of overtime, or an hourly job that does include benefits — and A could win. The point is to build the table rather than compare headline numbers.

Other things that differ

• Exempt vs non-exempt. The FLSA overtime exemption depends on duties and a salary threshold that the Department of Labor updates; check the current figure if you’re near it.
• Pay frequency. Bi-weekly (26 cheques) vs semi-monthly (24) changes cheque size, not annual pay, but affects budgeting.
• Raises. Salaried raises are usually annual percentages; hourly raises are often flat cents-per-hour, which can lag inflation. The percentage calculator makes a quick comparison: a $1/hr raise on $28 is 3.6%.
• Flexibility. Hourly roles often have firmer boundaries (you leave when the shift ends); salaried roles often have more schedule flexibility but blurrier limits.

Handy rules

• $15/hr ≈ $31,000 · $20/hr ≈ $41,600 · $25/hr ≈ $52,000 · $30/hr ≈ $62,400 · $40/hr ≈ $83,200 · $50/hr ≈ $104,000 (all at 2,080 hours).
• Every $1/hr ≈ $2,080 a year.
• Every paid week off is worth about 2% of annual pay.

Run your own numbers in the salary calculator — set weeks-per-year to the weeks you’ll actually be paid for, and compare the annual totals rather than the rates.