Job offers come in different formats. One employer quotes hourly. Another quotes annual salary. Comparing the two isn’t always as simple as it sounds, especially once benefits, paid time off, and actual hours worked enter the picture. Here’s how to convert cleanly between the two, and what to watch for along the way.
The Basic Conversion Formula
Annual Salary = Hourly Rate × Hours Per Week × 52 Weeks
For a standard full-time schedule of 40 hours per week, this simplifies to:
Annual Salary = Hourly Rate × 2,080
Real Example: $25/Hour Full-Time
Let’s convert.
- Hourly rate: $25
- Hours per week: 40
- Weeks per year: 52
Annual salary: $25 × 40 × 52 = $52,000
Breaking that down further:
- Monthly: $52,000 ÷ 12 = $4,333
- Biweekly: $52,000 ÷ 26 = $2,000
- Weekly: $25 × 40 = $1,000
Part-Time vs Full-Time Conversion
The math scales directly with hours worked. A $25/hour job at 20 hours per week (half-time) converts to:
$25 × 20 × 52 = $26,000/year
This straightforward scaling makes hourly-to-salary conversion useful for comparing part-time offers too, not just full-time roles. The Bureau of Labor Statistics’ wage data is a useful reference point for checking whether a given hourly rate is competitive for a specific role and region.
Accounting for Unpaid Time Off
The $52,000 figure above assumes you actually work all 52 weeks. Many hourly positions don’t offer paid vacation, meaning unpaid weeks off directly reduce your real annual earnings. If you take 2 weeks of unpaid time off:
$25 × 40 × 50 = $50,000/year
That’s a $2,000 difference from the “full 52-week” figure, purely from unpaid time off. This is one of the most overlooked gaps when comparing an hourly role to a salaried one that includes paid vacation by default.
Why Salary Isn’t Always More Valuable Than It Looks
A salaried position advertising $52,000 with two weeks of paid vacation is genuinely worth more than an hourly role paying the equivalent $25/hour with unpaid time off, even though the headline numbers look identical. The salaried role effectively pays for those two weeks you’re not working, while the hourly role does not. SHRM’s guide to comparing job offers walks through several of these less obvious value differences.
Factoring in Benefits Value
Hourly and salaried roles often come with different benefits packages entirely, which changes the real comparison significantly. Health insurance, retirement matching, and paid sick leave can add substantial value beyond the base pay figure. A study on total compensation from the Employee Benefit Research Institute suggests benefits can represent 20–30% of total compensation value at many employers, meaning a lower base rate with strong benefits can still out-earn a higher rate with minimal benefits.
Comparing Job Offers: Hourly vs Salary
When evaluating two different offers, convert everything to the same basis first, then adjust for these key differences:
- Actual hours expected — some salaried roles expect 45–50+ hours weekly, effectively lowering the true hourly equivalent
- Overtime eligibility — hourly, non-exempt roles typically qualify for overtime pay, while many salaried positions do not
- Paid time off included — factor in whether vacation, sick leave, and holidays are paid or unpaid
- Benefits package value — health insurance, retirement contributions, and other perks can meaningfully shift the real total compensation picture
Convert your exact hourly rate to salary. Use the Hourly to Salary Calculator →
Frequently Asked Questions
What is $20 an hour annually?
At 40 hours per week for 52 weeks, $20/hour converts to $41,600 per year. If you take unpaid time off, that figure drops proportionally based on the actual weeks worked.
How do I convert my salary to an hourly rate?
Divide your annual salary by 2,080 (the standard full-time hours in a year) to find the equivalent hourly rate. For example, a $60,000 salary equals approximately $28.85 per hour on a standard 40-hour schedule.
Is $25 an hour a good salary?
It depends heavily on your location and cost of living, but $25/hour ($52,000/year at full-time) sits above the median hourly wage in many parts of the US, though it may feel tighter in high cost-of-living metro areas.
Does overtime count in an hourly to salary conversion?
No, standard conversion calculations use your base hourly rate at regular hours only. Overtime pay, calculated separately at 1.5x your regular rate for hours beyond 40 per week, should be added on top if it’s a consistent part of your actual earnings.
How many work hours are in a year?
A standard full-time schedule totals 2,080 hours per year, based on 40 hours per week across 52 weeks, though actual hours worked may be lower after accounting for holidays, vacation, or unpaid time off.
Should I choose a higher hourly rate or a lower salary with better benefits?
It depends on your specific circumstances, but it’s worth calculating total compensation, including benefits value, rather than comparing base pay alone, since strong benefits can sometimes outweigh a meaningfully higher hourly rate with minimal benefits.