Hourly Wage to Salary (and Back): How to Convert Pay Correctly

A job offer says $60,000 a year. A contract says $30 an hour. Which is better? Until both are written in the same unit you cannot tell, and converting between them is less obvious than it looks, because the answer depends on how many hours and weeks you really work.

The basic conversions

Pay in any period can be turned into a yearly amount, and the yearly amount into any other period. The one assumption you must state is your schedule: hours per week and weeks per year.

• Hourly to annual: hourly rate × hours per week × weeks per year.
• Annual to hourly: annual pay ÷ (hours per week × weeks per year).
• Annual to monthly: annual pay ÷ 12.
• Weekly to annual: weekly pay × weeks per year.

A full-time schedule of 40 hours a week for 52 weeks is 2,080 hours. At $25 an hour that is $52,000 a year, which the Salary Calculator shows as $1,000 a week, $2,000 every two weeks, $4,333.33 a month and $200 a day.

Turning a salary into an hourly rate

Take the $60,000 offer. Over 2,080 hours it is $28.85 an hour, or $5,000 a month, or $2,307.69 every two weeks. That makes the $30-an-hour contract look slightly better, but only if you are paid for all 52 weeks.

Why weeks per year matters

Salaried jobs usually pay for holidays and paid leave. Many contracts do not. If you take four unpaid weeks, you work 48 weeks, not 52, and the same hourly rate yields less.

• $30 an hour for 40 hours across 48 weeks is $57,600, which is $2,400 less than the $60,000 salary.
• Turn it around: the $60,000 salary spread over 48 working weeks is $31.25 an hour. That is the hourly rate you would have to earn on a contract to match it if you take four unpaid weeks.

Part-time and uneven schedules

Hours per week is adjustable for the same reason. Someone earning $18 an hour for 25 hours a week over 52 weeks makes $23,400 a year, or $1,950 a month. Comparing that with a full-time offer means looking at the yearly total, not the hourly rate.

Why a month is not four weeks

A year has 52 weeks, so a month averages 4.33 weeks, not 4. Multiplying weekly pay by four understates monthly pay by about 8 percent. The correct monthly figure is the annual pay divided by 12: $1,000 a week is $4,333.33 a month, not $4,000. The same care applies to a pay cycle every two weeks. It has 26 pay days a year, not 24, so two months a year contain three pay days.

What the numbers do not include

The conversion gives gross pay, before tax and deductions. It does not include overtime premiums, bonuses, employer pension contributions, health insurance or paid leave. Two offers with the same gross figure can be worth quite different amounts once these are counted, so compare the whole package.

A short checklist for comparing offers

1. Convert every offer to a yearly figure using the same assumed hours and weeks.
2. Subtract unpaid weeks from contract rates before comparing.
3. Add benefits you would otherwise pay for yourself, such as insurance.
4. If the salary is large enough that tax bands matter, compare after tax.
5. Re-run the Salary Calculator with each scenario, and use the Percentage Calculator to see how much better one offer is than another.