Although salary isn't necessarily the most important consideration when looking at job openings, it makes sense to determine how much you'll be earning as you weigh your options. When the employer pays at an hourly rate, your monthly pay varies because the number of workdays is not always the same. Use some simple formulas to help you figure out what you'll earn.
Comparing an hourly wage to a monthly wage is like comparing apples and oranges. They aren't the same, so they cannot be measured against each other. To compare salaries, you must convert them to the same unit. Converting hourly wages to monthly or annual wages requires simple multiplication. Use a calculator or a calculator app on your phone to help you. Here's the formula:
Hourly wage x Number of Hours Worked Per Month = Monthly Pay
Some jobs advertise an annual salary. If you know how much you make hourly, you can estimate what that works out to in a year by multiplying by 2,080, which is the number of hours in a work year based on 40 hours per week for 52 weeks. As an hourly employee, the actual number of hours you work in a month varies. If you work Monday through Friday, for example, the number of workdays in a month can range from 20 to 23. Not every month has 31 days. April, June, September and November have 30 days each. February has 28 days except during a leap year (once every four years) when it has 29. You also have to account for holidays and vacation days if your employer only pays you for the number of hours you're actually on the job.
Overtime is calculated on a weekly basis. The Fair Labor Standards Act (FLSA) is a federal law that contains provisions about overtime. Unless exempt, employees must receive overtime pay of not less than one and a half times their hourly salary for hours over 40 hours in a given workweek. The Act does not require employers to pay overtime for work on Saturdays, Sundays, most holidays or regular days of rest unless you work more than 40 hours in that week. Nonexempt, or salaried, employees typically do not receive overtime pay, no matter how many hours they work in a week. When you apply for a job, ask whether the position is exempt or nonexempt.
Here's the formula for figuring out how much you'll make weekly with overtime pay:
(Hourly Rate x 40 hours) + (Hourly Rate x 1.5 x Number of Hours Over 40) = Weekly Pay Including Overtime
For example, assume a worker makes $12.00 per hour and works 46 hours in a workweek. The pay for 40 hours is $12.00 x 40, or $480. The worker put in an extra six hours and gets time-and-a-half, which is $12.00 x 1.5, or $18.00 per hour. Multiply 6 x $18.00 to get $108.00 and add that figure to the standard weekly rate. The worker makes $480 + $108, or $588 for the 46 hours worked that week.
Gross Vs. Net Pay
When employers name an hourly wage, they are referring to gross wage. That means the money before deductions, not net pay, which is what you take home. Employers are required to take money out of your pay, called withholding, for federal taxes. In states with a state income tax, money is withheld for that, too. Employers must also deduct money for Social Security taxes, called FICA. If there is a court-ordered deduction, such as for child support, that comes out of your gross wages. After all these mandatory deductions, the amount left is your net pay, which is what you take home.
You may arrange with your employer to take additional deductions. These may include insurance premiums, pension contributions and union dues. Your employer must have your agreement for these additional deductions in writing.