Salary to Hourly Converter

This divides an annual salary by the hours you actually work to give an hourly equivalent, plus weekly and monthly figures. The useful part is that it makes visible something a salary deliberately obscures: your effective rate falls every hour you work beyond your nominal week.

How to use it

1. Enter the annual gross salary.
2. Enter the hours you genuinely work per week, not the contracted figure.
3. Read the hourly, weekly, and monthly equivalents.

The shortcut everyone uses, and where it breaks

Halving the salary in thousands gives a rough hourly rate at 40 hours a week: $60,000 is about $30 an hour. That works because 40 hours times 52 weeks is 2,080 hours, close enough to 2,000 for mental arithmetic.

It stops working the moment the hours are not 40. That same $60,000 at 50 hours a week is $23.08 an hour. At 60 hours it is $19.23. The salary has not changed; a third of the effective rate has gone.

This is the structural difference between salaried and hourly work. An hourly worker who works more is paid more. A salaried worker who works more is paid the same, so every additional hour dilutes the rate. Running the calculation with your real hours rather than your contracted ones is often the most informative thing you can do with a job offer, particularly when comparing a higher salary at an employer with a long-hours culture against a lower one without.

Paid time off changes the divisor

A salary is paid across the year regardless of whether you are working, so paid leave raises your effective rate on the hours you do work.

With three weeks of vacation and ten public holidays, you work roughly 47 weeks rather than 52. On $60,000 at 40 hours, that is 1,880 hours worked and an effective $31.91 an hour rather than $28.85.

This matters most when comparing employment to contract work. A contractor who takes three weeks off is unpaid for those weeks, so the same annual income requires a higher hourly rate to begin with — before considering anything else.

Total compensation is not salary

Employer-paid benefits are real income that never appears in the salary figure, and they are typically 25 to 40 percent of it.

The components worth valuing explicitly:

• Health insurance premiums paid by the employer, commonly $6,000 to $20,000 a year for family coverage and the single largest item.
• Retirement matching. A 5 percent match on $60,000 is $3,000 of immediate return on your own contribution.
• Employer payroll taxes, roughly 7.65 percent in the United States, which a self-employed person pays in full themselves.
• Paid leave, sick days, and parental leave, valued at your daily rate.
• Disability and life insurance, professional development, and equipment.

Why a contract rate has to be much higher

Independent contractors cover everything an employer would otherwise provide, and the gap is larger than most people initially estimate.

Starting from a $60,000 salary at 2,080 hours, or $28.85 an hour: add the employer half of payroll taxes, add health insurance bought at individual rates, add unpaid time off, add retirement contributions with no match, add accounting and business insurance, and then account for unbillable hours spent on sales, invoicing, and administration — commonly 25 to 40 percent of your working time.

That last item is the one most often missed. Twenty-five billable hours in a 40-hour week means the billable rate has to carry the unbillable time as well. Working through the arithmetic, the equivalent contract rate for a $60,000 salary lands somewhere around $60 to $75 an hour, roughly double the naive figure. Rates set from the naive figure are the most common reason new freelancers work harder for less.

At a glance

Frequently asked questions

Read more

Pricing and pay — Margin is not markup, a 20 percent discount can halve your profit, and a 40-hour week does not contain 40 billable hours.

Related calculators