Job offers rarely come labeled "this is better." A $60,000 salary and a $30/hour job sound similar, but after taxes, overtime eligibility, benefits, and work hours, one might significantly outpay the other. Here's how to make a fair comparison.
The Basic Math: Hourly to Annual
A standard full-time schedule is 40 hours/week × 52 weeks = 2,080 hours/year.
Annual = Hourly Rate × 2,080
| Hourly Rate | Annual Equivalent |
|---|---|
| $15/hr | $31,200 |
| $20/hr | $41,600 |
| $25/hr | $52,000 |
| $30/hr | $62,400 |
| $40/hr | $83,200 |
| $50/hr | $104,000 |
Overtime: The Big Hourly Advantage
Under the FLSA (Fair Labor Standards Act), non-exempt hourly employees must receive 1.5× their hourly rate for hours over 40/week. Salaried exempt employees get no overtime.
Example: A $30/hour worker doing 45 hours/week earns:
40 hours × $30 = $1,200 regular
5 hours × $45 = $225 overtime
Weekly total: $1,425 vs. a salaried equivalent's flat $1,200
Over 50 weeks, that extra 5 hrs/week of overtime adds $11,250/year.
After-Tax Comparison
Both salary and hourly wages are taxed the same way by the IRS. The effective tax rate depends on total income and filing status. Approximate take-home for a single filer (federal + average state tax + FICA):
| Gross Annual Income | Approx. Effective Tax Rate | Approx. Take-Home |
|---|---|---|
| $35,000 | ~18% | ~$28,700 |
| $50,000 | ~22% | ~$39,000 |
| $65,000 | ~25% | ~$48,750 |
| $80,000 | ~27% | ~$58,400 |
| $100,000 | ~29% | ~$71,000 |
The Hidden Costs and Benefits
Salaried Advantages
- Predictable income regardless of hours
- More likely to receive full benefits package (health insurance, 401k match, PTO)
- Sick days often don't reduce pay
- Easier to get approved for mortgages and loans
Hourly Advantages
- Overtime pay for extra hours
- Paid for every hour worked — no "off-clock" work expected
- Easier to track exactly what you're owed
- Some hourly workers in high-demand fields earn premium rates
The Real-World Trap: Salary Scope Creep
Many salaried workers regularly work 50-55 hours/week. Let's recalculate their effective hourly rate:
Effective Rate = Annual Salary ÷ Actual Hours Worked
A $60,000 salary at 50 hrs/week: 60,000 ÷ (50 × 52) = $23.08/hr effective
Compare to a $30/hr hourly worker doing 40 hrs: $30/hr effective
The "higher-paying" salary actually pays $6.92 less per hour actually worked.
How to Make a Fair Comparison
- Calculate both as annual gross income (including expected overtime)
- Subtract employer benefits costs you'd pay yourself if switching (health insurance alone can be $5,000–$20,000/year)
- Estimate actual hours worked per week — not just what's on paper
- Calculate effective hourly rate for both
- Factor in retirement matching (a 4% 401k match on $60k = $2,400/year in free money)
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