Salaried vs Hourly Wage: What’s The Difference?

I used to think that it would be great to be a salaried employee with a set income per year, and I’m sure I’m not the only one who feels that way. But, I realized that an hourly wage can be better than a salary.

“Why,” you ask? Well… Read on to find out more about the difference between an hourly wage and salary.

Salary vs Wage

Many people wonder if it is better to be paid hourly or salary. After reading through the difference, this will help you decide for yourself.

What is a salary?

A salaried employee makes a fixed amount of money per year as agreed to in their contract. They make this amount regardless of if they work more or less than 40 hours per week. Similar to an hourly wage, it is typically split into fixed intervals as monthly or bi-weekly payments with 12 to 26 pay periods in a year.

Example: A person with a $100,000 salary would make $4,166 bi-weekly or $8,333 monthly.

What does hourly mean?

An employee with an hourly wage gets paid for each hour that they are working. 

Example: Someone who gets an hourly wage of $15 per hour would make about $31,200 per year if they work 2080 hours.

What is the difference between a salary and an hourly wage?

The major difference between wage and salary is that the salaried person makes a set amount for the year every year. However, the hourly person gets paid depending on the exact amount of hours they work. Therefore, they can make more or less from year to year.

Is salary better than hourly?

The answer to this question is not simple; it really depends on the career field that you work in. At first glance, a salaried position would be better because you are able to work fewer days or hours and still get the same amount of money per year.

However, that also means you might be in a situation and working long hours without getting extra money or overtime rates. You might also be expected to answer your phone/ emails and respond to emergencies after-hours.

If you want to secure a good work-life balance with the potential to earn extra, hourly is better. But if you want a predictable salary, a salaried position is better.