Hourly to salary calculator: convert pay in both directions

An hourly rate and an annual salary are two ways of describing the same thing, but they are not interchangeable. Converting between them takes one multiplication and one division. Getting a fair conversion takes a little more, because the two pay structures treat time off, holidays and overtime differently.

This page works out what a given hourly rate produces over a year, and what a salary implies as an hourly rate. It also shows the gap that unpaid time off opens between the two, which is the single largest reason a rate that looks equivalent to a salary is not.

The arithmetic is simple enough to do by hand. The judgment is in choosing the inputs: how many weeks you are actually paid for, and whether the comparison you are making is between two hourly jobs, two salaries, or one of each.

#The formula

Annual gross pay is the product of three numbers, with unpaid weeks subtracted from the year before you multiply.

Formula: Annual gross = hourly rate x hours per week x (weeks per year - unpaid weeks off)

Where:

• Hourly rate is the base rate before any overtime premium, in dollars per hour.
• Hours per week is scheduled paid hours, not hours present at work.
• Weeks per year is 52 unless you are describing a contract that runs for part of the year, such as a school term.
• Unpaid weeks off is time you take but are not paid for. Paid vacation is not entered here; it is already inside the paid weeks.

The per-period figures all divide the annual total:

Formula: Monthly = annual / 12, Biweekly = annual / 26, Semimonthly = annual / 24, Weekly = rate x hours

Reversing the calculation, the implied hourly rate is annual salary / total paid hours, where total paid hours is hours per week x paid weeks.

#A worked example, step by step

Take a rate of $28.00 an hour, 40 hours a week, a 52-week year, and two weeks off that are not paid.

1. Paid weeks: 52 - 2 = 50.
2. Total paid hours: 40 x 50 = 2,000 hours.
3. Annual gross: 28.00 x 2,000 = $56,000.
4. Monthly: 56,000 / 12 = $4,666.67.
5. Every two weeks: 56,000 / 26 = $2,153.85.
6. Twice a month: 56,000 / 24 = $2,333.33.
7. Weekly: 28.00 x 40 = $1,120.00.
8. Daily, on a five-day week: 1,120 / 5 = $224.00.

The last output is the one people quote in job listings. At 2,080 hours, the same rate would produce 28.00 x 2,080 = $58,240. The two unpaid weeks cost 28.00 x 40 x 2 = $2,240, which is exactly the difference between $58,240 and $56,000.

#Where the 2,080-hour convention comes from

The number 2,080 is 40 hours x 52 weeks. It is a convention, not a legal definition. It assumes a full-time schedule with no weeks removed from the year, which is why a salaried job quoted at $58,240 and an hourly job at $28.00 are usually not the same offer.

A salaried employee with three weeks of paid vacation and ten paid holidays is at work for roughly 52 - 3 - 2 = 47 weeks, or about 1,880 hours, while still being paid for 2,080. Divide the salary by hours actually worked and the salaried rate rises: $60,000 over 1,880 hours is $31.91 an hour of real work, against $30.00 an hour on the 2,080 convention.

Note: 2,080 is a rounding. A calendar year is 52 weeks and one or two days, so some years contain 261 or 262 weekdays rather than 260. Payroll systems handle this through the number of pay periods, not by changing the 2,080 figure.

#Converting the other way: salary to hourly

Divide the salary by the hours it buys. Which hour count you use changes the answer more than most people expect.

The third column is the honest number to quote when you are asking what an hourly contract must pay to replace a salaried job, because it prices the hours you would actually have to be present. If the role also carries employer-paid health coverage or a retirement match, add the annual value of those before dividing.

#Where each input comes from

Hourly rate. Use the base rate on your pay stub, not an average that includes overtime. Overtime is a premium on top and belongs in the overtime pay calculator instead, because averaging it into a base rate overstates a normal week.

Hours per week. Take the scheduled figure from your offer letter or schedule. If your hours vary, average the last eight to thirteen weeks rather than picking a good one. A variance of four hours a week on a $28 rate moves annual pay by about $5,600.

Weeks per year. Leave this at 52 for a year-round job. Reduce it for seasonal, term or contract work that genuinely stops.

Unpaid weeks off. This is the sensitive input for hourly workers. Count unpaid vacation, unpaid holidays and any regular shutdown week. Salaried readers normally leave it at zero.

Sensitivity, in order: hours per week and hourly rate move the result proportionally; unpaid weeks move it by about 1.9% each on a 52-week year.

#How unpaid time off changes the total

At $28.00 an hour and 40 hours a week:

The final column is what the hourly job is worth when you compare it against a salary quoted on the 2,080 convention. Five unpaid weeks turns a $28.00 rate into a $25.31 salaried equivalent, a difference of $5,600 a year.

#Why 26 paychecks is not 24 paychecks

Every two weeks and twice a month sound alike and are not. Biweekly pay lands every fourteen days, so a 365-day year contains 26 payments. Semimonthly pay lands on two fixed dates, so it contains 24.

On $56,000 a year, biweekly checks are $2,153.85 and semimonthly checks are $2,333.33. The annual total is identical; only the size and timing differ.

Ten months of the year a biweekly employee receives 2 x 2,153.85 = $4,307.69, which is $358.98 short of a twelfth of the annual salary. Two months contain a third check. Those two extra checks total $4,307.70, which is exactly the twelve monthly shortfalls added up. Nothing extra has been earned; the money has been redistributed across the calendar.

#How to read the result

The annual gross figure is pre-tax. It is the number to put on a loan application and the number to compare against a salary offer, but it is not what reaches your account. Run it through the take-home pay calculator to see the paycheck.

The 2,080-hour equivalent is the comparison number. If a salaried offer beats it, the salaried offer is ahead on cash before you weigh benefits and paid leave.

The per-period figures matter for cash flow planning: monthly bills against biweekly pay means budgeting to the ten-month rhythm, not the twelve-month one.

For part-time and variable schedules the annual figure is best read as a range rather than a point. Run the calculation twice, once at your quietest recent week and once at your busiest, and treat the two answers as bounds. A worker averaging 24 hours a week at $28.00 across 50 paid weeks grosses $33,600, and a swing of six hours a week in either direction moves that by $8,400, a quarter of the total. Seasonal contracts behave the same way, which is why the weeks-per-year field matters as much as the rate for anyone whose year does not run continuously.

One more reading of the same output: total paid hours is the denominator for almost every other pay question you will ask. Benefits eligibility thresholds, leave accrual rates and per-hour comparisons between two offers all rest on it, so it is worth settling before anything else.

#What this model leaves out

• Overtime. The model assumes every hour is paid at the base rate. Time over 40 hours in a workweek is normally paid at a premium for non-exempt workers.
• Shift differentials, tips, commission and bonuses. None are in the base rate.
• Employer benefits. Health premiums, retirement matching and paid leave often carry real annual value that no hourly rate shows.
• Payroll taxes and deductions. This is gross pay only.
• Paid holidays. If a salaried job pays ten holidays and an hourly job does not, the hourly job needs a higher rate to match, and this model captures that only if you enter the holidays as unpaid weeks.
• Unpaid hours the job demands anyway. The real hourly wage calculator handles commuting and unpaid overtime.

#Common mistakes

Multiplying by 12 instead of 26. A biweekly check is not a half-month check. Doubling a biweekly amount and multiplying by 12 understates annual pay by about 8.3%.

Assuming 2,080 is universal. Part-time, seasonal and shift work rarely fit it. Use your own hours.

Treating a salary as a per-hour guarantee. Salaried pay does not increase with hours, so long weeks quietly cut the effective rate.

Entering paid vacation as unpaid weeks. Paid leave is already inside the paid weeks. Entering it twice understates annual pay.

Comparing an hourly rate to a salary without pricing benefits. Contract work usually needs a higher headline rate to break even; the freelance hourly rate calculator works out how much higher.

Ignoring accrued leave. Paid time off is deferred compensation. The PTO accrual calculator converts a policy into hours.