What is Better, Salary or Hourly?

by Anza Goodbar
(last updated November 22, 2011)

There are pros and cons to each method of payment. However, based on the type of industry and job you have chosen for your profession, you may not get to choose the manner in which your payroll is distributed to you.

If you are an hourly employee, you are guaranteed a certain number of hours each month for a certain hourly wage. If you work more than 40 hours per week, you are entitled to over-time pay at 1.5 times your hourly rate. Legally hourly employees must be compensated double time for holidays. The drawback to hourly pay is if you don't work, you don't get paid, unless you are in a full-time position with a company that offers sick time benefits. If you are in an hourly position and cut backs need to take place, hours may be cut to save payroll dollars, where as a salaried person would be paid the same, you may experience a cut in pay due to reduced hours worked.

In some professions, like nursing, hourly pay may be more advantageous than a salaried position. With the high need for nurses and low numbers of workers, extra shifts are always available should you want to make extra income. Also, additional hours for charting files can provide an avenue for making additional income.

If you are a salary employee, you are still guaranteed a certain amount each pay period; however a minimum number of hours may be required for the salary. A benefit to being a salaried employee is if you are able to complete your work at an acceptable performance level in less than 40 hours, you don't have to stay at work and you will make the same amount of money. Should you have to work overtime, you will not be given additional compensation. Some companies, base salaries on a 60 hour work week to compensate for expected overtime hours worked over the course of a year.

When looking at the type of compensation you are seeking, ask what working hours are expected. Will you make more money if you are eligible for over time? What hourly average was the salaried compensation based upon? Will additional compensation be offered if overtime requirements exceed the expected hourly estimation? What other perks are offered to have a salaried position versus an hourly position?

While a salaried position may look more prestigious, if you actually break down the hourly rate based on actual hours worked, hourly pay may actually be the better deal. Before accepting a compensation plan, be sure you understand the hourly requirement and how the pay structure would differ based on the two methods of payment.

Author Bio

Anza Goodbar

Anza is a single mother of four who makes her home in Colorado. She enjoys writing, hiking and is an avid football and hockey fan. She is the owner of a virtual business services company; writing is just one of the many services her company offers. ...

MORE FROM ANZA

Airbrush Tanning Tips

Proper skin preparation is essential to successful airbrush tanning. If the skin has not been exfoliated well, the tan can ...

Discover More

Berries 'N Stars

Berries 'N Stars is a beautiful dessert that looks like you worked hard to create a masterpiece, but it is simple to ...

Discover More

Chicken Enchiladas

Chicken enchiladas are a tasty Mexican dish, but they can often be filled with unwanted fats and carbs. This recipe is a ...

Discover More
More Money Tips

Tapping Into Your Home's Equity

There are many options for tapping into your home's equity. Banks offer several kinds of home-equity financing options from ...

Discover More

How to Calculate Your Cost of Living

The Consumer Price Index is a measurement of a basket of goods and services. By looking at the CPI for your location you can ...

Discover More

Staying Financially Grounded Through Divorce

Divorce can be a difficult time emotionally. Emotions can get in the way of making good decisions about your financial ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 6 + 0?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)