Is math not your strongest skill? Join the club!

Odds are you’ve stumbled upon this article in search of a little help regarding the numbers that define your paycheck. If so, you’ve just thrown a bull’s-eye! We’re here to help!

This article aims to remove the mystery surrounding compensation by examining how hourly wages are calculated, how to tally annual hours worked, how salaried employees can determine their hourly wages, and much more. 

So, grab (or open up) your trusty calculator, because it’s number-crunching time!

What Is an Hourly Wage?

An hourly wage is exactly what it sounds like: The amount of money an employer pays an employee for each hour of work. 

For workers paid on an hourly basis, this amount is the basic tenet of their compensation. Employees can use this amount, along with their hours worked, to determine their gross pay across any time period (day, week, month, year, etc.). Spoiler alert: Keep reading to learn how!

An employee’s awareness of his or her hourly wage is an incredibly important facet of the compensation equation. Knowing and understanding one’s hourly wage and the market he or she works in grants an employee the ability to appropriately budget for his or her family, negotiate future wages, manage his or her work-life balance, and much more.  

Hourly wages are prevalent in numerous industries, including, but not limited to, retail, hospitality, manufacturing, health care, warehousing, etc. 

How to Calculate Your Hourly Wage

To calculate the amount of money an hourly worker earns each pay period, simply multiply the number of hours he or she works by his or her hourly wage. For example, if a worker earns $20 per hour and works 40 hours per week the weekly compensation calculation would look like this:

If an employee is paid biweekly, the number of hours in the calculation would double from 40 to 80. The subsequent equation would be:

This equation can be reverse-engineered as well. If an employee knows the amount he or she has earned for a specific time period, i.e., $1,600 a week, and the number of hours he or she has worked, i.e., 40 hours, you can calculate the amount using division instead of multiplication. 

What Is a Salary?

A salary is a form of fixed compensation paid to an employee in exchange for services he or she provides to an employer. Unlike hourly wages, which are based on the number of hours worked, a salary is a predetermined amount of money an employee receives on a consistent basis, typically on a biweekly, monthly, or annual basis, regardless of the hours worked. 

The term "salary" originates from the Latin word "salarium," which refers to the money Roman soldiers used to purchase salt, an essential commodity at the time. The salarium transaction gave rise to the saying "being worth one's salt."

Salaries are typically negotiated during the hiring process, with the employer generally offering a contract and the employee signing it upon agreement. The amounts can vary based on each industry, position, experience, employee qualifications, etc. 

In most professions, salaried employees are exempt from overtime pay; however, there are exceptions to the rule based on an employee’s job duties, salary level, and classification under the Fair Labor Standards Act. 

How to Calculate Your Salary Per Hour

Calculating one’s salary per hour requires a few basic elements, including pay frequency, gross pay, and total hours worked. Please remember that these examples are generalizations that do not account for holidays, paid time off, sick time, tax implications, benefits, etc. 

For the sake of this example, let’s assume our employee, Charlie, earns $100,000 annually, working 40 hours per week on a biweekly pay schedule. Here are some steps one can take to determine Charlie’s salary per hour.

The first figure we need is the employee’s annual salary. An employee’s annual salary is defined as the compensation he or she is contracted to receive for a year’s worth of work. This amount should be reflected as gross pay – earnings before taxes. For the sake of this example, let’s consider our employee, Charlie, who earns $100,000 annually. 

Next, we need to determine the employee’s pay frequency. Common intervals include weekly, biweekly (every two weeks), semimonthly (twice a month), and monthly. Charlie is paid biweekly (26 times per year).

Then, we need to determine the number of hours an employee works per year (or whatever time interval you prefer). This can be determined by multiplying the number of hours the employee works each week by the total number of weeks he or she works. In Charlie’s case, he works 40 hours per week across all 52 weeks in a year. 

To calculate an employee’s salary per hour, divide the individual’s annual salary by the total number of hours worked. For Charlie, we’d divide $100,000 by 2,080 hours. 

Finally, to determine the salary per week, take the salary per hour amount and multiply it by the number of hours the employee works each week. Since Charlie is earning $48.08 per hour in gross pay, we simply multiply that amount by the number of hours he works each week (40). 

Various Annual Salaries Converted to Hourly Rates

Using the aforementioned process, let’s examine the arithmetic behind a few unique employment scenarios and unearth their hourly, weekly, and annual salay rates.  

Part-Time Sue Earns $35,000 Annually

Let’s assume our employee, Sue, earns $35,000 working 20 hours per week and is paid weekly. 

To determine her total annual hours worked, multiply the number of hours she works each week (20) by the total number of weeks (52) she works.

To calculate her salary per hour, divide her annual salary ($35,000) by the number of hours worked (1,040)

To determine her weekly salary, multiply her hourly wage ($33.65) by the number of hours she works per week (20). 

Executive Eddie Earns $250,000 Annually

Eddie, a white-collar executive, earns $250,000 working 40 hours per week and is paid monthly.

Seasonal Paul Earns $10,000 for Summer Work

Paul, a college student, works for a construction company over summer break. In 2024, he began work on May 6 and wrapped up his seasonal employment on July 31. 

The company strictly limits him to eight hours a day so that they don’t have to pay him overtime. And despite receiving time off over Memorial Day and Independence Day, the company has pledged to pay him $10,000 for the summer, as long as he shows up every day on time. 

So, in Paul’s case, when removing the two aforementioned holidays, he will work 61 days. 

Calculating Your Salary Per Week

Let’s take a look at a few common annual salaries and perform the calculations behind the numbers. (For each of these examples, we’ll assume the employee is working the standard 40 hours per week and 2,080 hours per year.) 

Salary Per Week: $30,000 Per Year

Salary Per Week: $40,000 Per Year

Salary Per Week: $50,000 Per Year

Salary Per Week: $60,000 Per Year

Helpful Tools to Track Hours Worked

To adequately pay an employee, his or her hours worked must be tracked. While scribbling hours down on a sheet of paper is one option, it’s certainly not the most efficient. Modern technology allows employees and managers to track time from the convenience of their own smartphones. One such app, OnTheClock, is especially proficient when it comes to managing employees’ time. OnTheClock holds all of its data in the cloud and offers various benefits and advantages. Many of those are listed here. 

Accurate Time Records: OnTheClock provides precise time tracking tools that allow employees to clock in and out with just a few clicks. This accuracy ensures that all hours worked are recorded correctly, eliminating the guesswork associated with manual timekeeping.

Automated Time Calculations: OnTheClock automatically calculates total hours worked, including regular hours, overtime, and any other custom time categories defined by the business. This feature helps to reduce administrative work and minimize errors in calculations.

Real-Time Tracking: OnTheClock tracks employee hours in real-time, allowing managers to quickly and efficiently monitor who is currently clocked in, when they clocked in, and the duration of their time. This detail provides immediate insight into workforce utilization and productivity.

24/7 Access: With the OnTheClock mobile app, employees can clock in and out from anywhere, making it ideal for remote workers, field employees, or those with flexible work arrangements. GPS tracking and geofencing capabilities ensure employee punches occur at designated work locations, enhancing the accuracy of time entries. This feature also curbs time theft, as employee punch locations can be limited, minimizing employees from punching in outside of their work perimeters. 

Payroll Integration: OnTheClock seamlessly integrates with various third-party payroll systems, automatically transferring recorded hours into the payroll process. This integration simplifies payroll calculations and ensures timely and accurate payments to employees.

Shift and Schedule Management: OnTheClock allows team leaders to create, update, and manage employee schedules at any time. Employees have access to their schedules 24/7 from the convenience of their mobile phones. 

Customizable Reports: Managers can create reports detailing employee hours worked, overtime shifts, and other analytics. This data can be customized to meet specific business needs and utilized to plan future projects. 

Notifications and Alerts: Employees and managers can opt to receive alerts and notifications for various time tracking events. If and when an employee misses a punch or is approaching the overtime threshold, a customizable notification can be sent to the employee, his or her manager, or the company owner. .

Conclusion

Understanding how to calculate your hourly wage and keeping track of your work hours is essential for managing your finances effectively. Whether you're an hourly worker or a salaried employee, knowing the value of your time is crucial.

OnTheClock is a quick, easy, and affordable way to maximize every minute. The software provides a comprehensive solution for tracking hours worked, enhancing efficiency, accuracy, and compliance in workforce management. The app may be downloaded for free today in mere seconds. Try OnTheClock out today and discover why 157,000 individuals utilize the software to maximize their minutes. For more information, visit www.ontheclock.com.