Hourly vs Salary: How to Compare
An hourly rate and a salary are not directly comparable. Annualize both, then account for hours, unpaid leave, overtime, benefits and commuting. This is a repeatable comparison order.
Annualize the hourly rate
Annual pay = hourly rate times paid hours per week times paid weeks per year. With two weeks of unpaid leave, use 50 weeks, not 52.
Add overtime and benefits
Hourly work may include 1.5 times overtime, unpaid leave and self-funded insurance. Salaried work may include a bonus, 401(k) match and paid leave. Convert employer-paid benefits to cash and add them back.
Decide on total compensation
Compare after-tax pay, total hours, commuting and growth. Looking only at the monthly number hides an extra five hours per week.
FAQ
Should I use 52 or 50 weeks?
Use paid weeks. The more unpaid leave you have, the more 52 weeks overstates annual pay.
How should overtime be counted?
Add overtime at 1.5 times separately; do not blend it into the regular rate.