Salary vs Hourly: How to Compare Pay When the Hours Differ

To compare a salary with an hourly rate, divide the salary by the hours you will actually work in a year, not the 2,080 hours everyone assumes. Then adjust for three things that flip more offers than the headline number does: paid time off, overtime rules and benefits.

Every pay figure below comes from the Salary Calculator, so you can type the same inputs and get the same answers. Rules and statistics link to their official source, with a date and the country or province they apply to, because overtime law changes at the border.

The salary to hourly formula, and the hours it hides

The standard conversion is hourly rate = annual salary ÷ (hours per week × weeks per year). At 40 hours and 52 weeks that is 2,080 hours, so $60,000 a year works out to $28.85 an hour.

The catch is the 40. Salaried jobs rarely pay for extra hours, so every hour you stay late lowers your real rate. If the $60,000 job quietly expects 50-hour weeks, you are earning $23.08 for each hour you work.

So ask in the interview what a normal week looks like, and use that number, not the one on the contract. If the answer is "it depends on the season", ask for the hours in the busiest month and run that number too.

Paid time off: the weeks an hourly rate leaves out

Salaried staff are usually paid for vacation and holidays. In the US, federal law "does not require payment for time not worked, such as vacations" (Department of Labor, checked 2026-10), and contractors anywhere get nothing for time off. So in those jobs an hourly rate pays only for the weeks you are there. Take a $30 hourly job with three weeks of unpaid vacation and ten unpaid holidays: that is five weeks without pay, or 47 paid weeks a year.

Overtime rules: where hourly pay pulls ahead

Overtime is usually paid at 1.5 times the regular rate, but the point where it starts depends on where you work:

• United States (federal): non-exempt employees get time and a half for hours over 40 in a workweek, per the Department of Labor (checked 2026-10). Being on salary or having a manager title does not make you exempt by itself: your pay and your actual duties both have to meet the tests in Fact Sheet #17A.
• Canada, federally regulated jobs: overtime after 8 hours a day or 40 a week.
• Canadian provinces: five use 40 hours a week; Alberta, New Brunswick and Ontario use 44, and Nova Scotia uses 48 (CFIB summary, 2026-10). Prince Edward Island moved its maximum work week from 48 to 44 hours on June 30, 2026 (PEI government, checked 2026-10).
• Ontario: overtime after 44 hours a week, and salaried employees get it too unless an exemption applies, such as managerial or supervisory work (Ontario ESA guide, updated 2026-02).

Now a worked example. Two people each work 45 hours a week, all 52 weeks paid. One earns $30 an hour with overtime; the other has a $70,000 salary in a role exempt from overtime. With a 40-hour threshold, the hourly worker makes $74,100 a year. Move the same job to Ontario and only one of the five extra hours counts as overtime.

The Salary Calculator doesn't model overtime directly. To check an offer yourself, run it twice: once for your regular hours at your rate, once for the overtime hours at 1.5 times the rate, then add the two annual figures. That is exactly how the table above was built. The exempt column assumes a role that legally gets no overtime, such as a US exempt job or a manager in Ontario; a non-managerial salaried employee in Ontario would be owed that 45th hour at time and a half.

Benefits: about 30% of what an employer spends on you

In June 2026, benefits made up 30.0% of what US private employers spent on compensation: $14.07 of every $46.89 per hour worked, according to the Bureau of Labor Statistics (released 2026-09). That average includes legally required costs, insurance, paid leave and retirement plans. Canada's mix is likely different, since provincial health plans cover care that US employers often insure, so treat the US figure as a sign of scale, not a number to plug in.

For a real comparison, ask each employer for the dollar value of three things: the retirement match (RRSP, pension or 401(k)), the health and dental premiums they pay, and paid sick days. Those are the items an hourly or contract job usually leaves you to fund yourself. If an employer won't give numbers, compare the offers without benefits and treat any you do get as a bonus.

Freelance and contract rates: price the hours you can bill

A freelancer can't bill 2,080 hours. Admin, sales and gaps between clients eat into the week, and nobody pays for your vacation. To match an $80,000 salary ($38.46 an hour at 40 hours and 52 weeks), price your rate on the hours you can actually bill.

Say you bill 30 hours a week for 46 weeks. Put $80,000, 30 hours and 46 weeks into the Salary Calculator and it returns $57.97 an hour, about half again as much. Your own split of billable hours may be better or worse; the point is to use yours.

That rate still doesn't cover the employer's share of payroll taxes, which you now pay too. In Canada, self-employed workers pay both the employee and employer portions of CPP (CRA, checked 2026-10). In the US, self-employment tax is 15.3% for Social Security and Medicare (IRS, reviewed 2026-06).

Bi-weekly vs semi-monthly paychecks

Bi-weekly pay means 26 paychecks a year; semi-monthly means 24, paid twice a month on fixed dates. On a $60,000 salary that is $2,307.69 per bi-weekly check against $2,500 semi-monthly. The annual total is the same. Bi-weekly just gives you two months a year with three paychecks.

If you're weighing a raise against savings, the compound interest guide shows what a few hundred dollars a month turns into over time.