By Nishikant Xalxo | Finance Expert | Updated: January 10, 2025 | 9 min read
I switched from hourly to salary in 2022 and initially regretted it—until I calculated the total compensation. Here's how to make the real comparison, including hidden factors most people miss.
The Basic Math
Example: $25/hour vs $52,000/year salary
Hourly: $25/hour × 40 hours/week × 52 weeks = $52,000/year
Salary: $52,000/year ÷ 52 weeks ÷ 40 hours = $25/hour base
Looks equal, but it's not that simple.
Factor 1: Overtime
Hourly worker: Eligible for 1.5x OT after 40 hours/week
Salary worker: Usually exempt from OT (no extra pay)
Scenario
Hourly (45h/week)
Salary (45h/week)
Base pay
$52,000
$52,000
OT pay (5h/week × 1.5)
+$9,750
$0
Total
$61,750
$52,000
Verdict: If you regularly work >40 hours, hourly pays more.
Factor 2: Benefits Differences
Salary workers typically get:
Paid time off (vacation, sick days) - value $3,000-5,000/year
Better health insurance - value $2,000-4,000/year
401k/retirement matching - value $1,500-3,000/year
Bonus opportunities - $2,000-10,000/year
Total benefits value: $8,500-22,000/year
Real Hourly vs Salary Comparison (at $52k base):
Hourly (45h/week): $61,750 base + $0 benefits = $61,750
Salary (45h/week): $52,000 base + $15,000 benefits = $67,000
Salary wins by $5,250/year when benefits included.
Factor 3: Job Security
Salary advantages:
Harder to lay off (more employment protections)
Notice period before termination
Severance packages more common
Unemployment benefits often higher
Hourly reality: Can be sent home early, schedule reduced without notice.
Factor 4: Career Growth
Salary positions:
Clear promotion paths
Performance reviews and raises
Management opportunities
Professional development budget
Hourly reality: Limited advancement, annual raises only track inflation.
Real Decision Matrix
Choose Hourly if:
You work exactly 40 hours/week (no more)
You need flexibility in schedule
You want OT pay for extra hours
Choose Salary if:
You work 45+ hours/week consistently
Benefits are important to you
You want career advancement
Job security is priority
About the Author: Nishikant Xalxo calculated his salary switch using these exact methods. His hourly-to-salary transition included a 15% raise after factoring benefits. Calculator: shader7.com/hourlysalarycalculator/