Salary Versus Hourly

The idea of having a good position with an employer with a good title is often the goal of a worker. More responsibilities equate to receiving more money, right? That’s not often the case. Salaried workers don’t currently have access to overtime compensation, don’t receive holiday pay, and are often asked to work longer hours than hourly employees. For some salaried workers, this means they actually make less per hour than their hourly direct reports!

How can you tell if a salaried position is better than an hourly position?

Salaried Position and Compensation Package

The compensation package is much better sometimes with a salaried position. Although more hours are often required of a salaried worker, there are also more opportunities to take time away from the job usually too. Instead of overtime, some salaried workers are given “comp time” which allows them to take time off without eating into sick time or vacation days. Some employers even allow some comp time to be converted into additional money, sick days, or vacation time at the end of the year if it is unused. Other employers, however, don’t have any comp time policies whatsoever and don’t allow the practice.

Increased Benefits with Salaried Positions

Some employers offer step-up benefits to salaried workers that aren’t given to hourly workers. This could include:

• Faster Vacation Time Accrual.
• More Sick Days Per Month Granted.
• Better Compensation Through a 401k Plan or Equivalent.
• Better Flexibility in When to Report to Work.

Benefits might also include better health care coverage, training compensation, travel compensation, and other perks. Evaluating all of these benefits in addition to the salary comparison is important to do so an empowered decision can be made.

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How to Earn More Money

Hourly workers are generally eligible to receive overtime for extra work done during the week. This may include time worked beyond a specific time during one shift without exceeding 40 hours. A worker may receive 2 hours of overtime, for example, if they work a 12 hour day because overtime in their community is mandatory after 10 consecutive work hours. Holiday pay and other pay bonus opportunities are also included in hourly compensation and not necessarily so in salaried compensation.

Hourly Workers General Differences

Hourly workers generally have less overall responsibility. Some people love a leadership position, but others avoid it like the plague. Many hourly positions are entry level workers that, over time, can make just as much every day as a salaried worker in the same department without the same levels of responsibilities. It is not uncommon for a salaried worker, late in their career, to transition back to an hourly wage because they actually receive more in compensation for doing less overall work.

Salaried workers have an advantage of knowing exactly what their paycheck will be every week because it is guaranteed in their work contract. Hourly workers, on the other hand, sacrifice income security for the chance to earn more money each week. Which one is right for you? That all depends on what you want and what your finances need at this given moment.

Profile of a Hourly Employee

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