What an hourly rate is worth annually
Comparing an hourly job against a salaried offer requires putting both on the same footing. This calculator does the conversion, and the sections below cover the two assumptions that make most conversions wrong.
The formula
The standard full-time year is 40 hours × 52 weeks = 2,080 hours.
Worked example: $28 an hour
- 28 × 2,080 = $58,240 a year
- Monthly: $4,853
- Weekly: $1,120
The 2,080 assumption
2,080 hours assumes you are paid for every week of the year, including holidays and sick days. Salaried employees are; hourly employees frequently are not.
| Situation | Paid hours | At $28/hr |
|---|---|---|
| Paid holiday and leave | 2,080 | $58,240 |
| 2 weeks unpaid leave | 2,000 | $56,000 |
| 2 weeks leave + 10 unpaid holidays | 1,920 | $53,760 |
| Seasonal, 45 weeks | 1,800 | $50,400 |
The same $28 rate spans $50,400 to $58,240 — a gap of nearly $8,000 decided entirely by which weeks are paid.
The comparison salaried workers forget
Hourly work is paid overtime beyond 40 hours; most salaried roles are not. An hourly worker averaging 45 hours earns $28 × 2,080 plus 260 overtime hours at $42, which is $69,160.
A salaried employee on $65,000 working the same 45 hours is effectively earning $27.78 an hour — less than the hourly worker who nominally earns less. Divide the salary by the hours you actually work before deciding which offer pays more.
What this calculator leaves out
Benefits, which commonly add 20 to 30% of salary in value and are far more often attached to salaried roles. Health cover, employer pension contributions and paid leave rarely appear in an hourly rate.
Contract rates need a bigger multiple
A contractor billing $28 an hour is not earning $58,240 equivalent. Self-employment tax, health cover bought individually, no paid leave and unbillable time between engagements typically consume 25 to 35% of the headline.
The rough convention is that a contract rate needs to be 1.3 to 1.5 times an employee's hourly equivalent to match it. To match $58,240 as an employee, a contractor should be billing closer to $38 to $42 an hour, and billing fewer than 2,080 hours.
What the annual figure becomes after tax
$58,240 gross in the United States leaves roughly $46,000 after federal income tax, Social Security and Medicare, before any state tax. That is about $22 an hour of take-home against a $28 headline.
Comparing two offers on gross is correct, because deductions are broadly proportional. Comparing an offer against your actual budget requires the net figure, and the gap between them is where most affordability mistakes begin.
Raises look different by the hour
A dollar an hour is $2,080 a year at full time — a 3.6% raise on $28. Employers frequently present the hourly figure because it sounds small and the annual figure because it sounds large, depending on which way the conversation is going.
Convert every offer both ways before responding. A 50-cent increase is $1,040 a year; a $2,000 annual raise is 96 cents an hour.
Related calculators
- Salary to hourly calculator — the same conversion in reverse
- Overtime calculator — the premium hours priced properly
- Salary calculator — gross against take-home