Comparison of annual salary to hourly wage

Written by john csiszar
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Comparison of annual salary to hourly wage
The differences between annual salaries and hourly wages amount to more than net pay. (100 image by kaleff from Fotolia.com)

Annual salaries and hourly wages are two different ways that employers can pay their workers. While some hourly workers can earn more than salaried workers, hourly wages are often attached to lower-paying jobs that come without the added perquisites that are commonly provided for salaried employees.

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Job Stability

Hourly wage earners generally fall into one of two categories, either minimum-wage workers or freelance workers. In either case, the hourly-wage earner is not generally under permanent contract with an employer, whereas salaried employees usually must be retained by a company unless reasonable cause is shown. Most hourly-wage earners tend to be shorter-term employees. Minimum-wage jobs are often seasonal in nature and generally not overly appealing to workers, who often seek and find higher-paying jobs and leave their minimum-wage jobs. Freelancers and consultants usually work on a contract basis and move on to another job when their contact is up. Salaried employees, on the other hand, tend to remain with their employer unless other factors displace them.

Hours Per Week

Salaried workers are generally "full-time" workers on a 40-hour workweek schedule, as opposed to hourly workers who often work on a part-time basis. On the other hand, consultants working on a contract basis may have to put in more than 40 hours a week in order to complete their projects.

Benefits

Full-time salaried employees generally have a benefits package attached to their employment, including health and life insurance for themselves and their families and access to a retirement plan. Hourly workers, including contract employees, are rarely offered benefits.

Paid Vacation

Paid vacation is one of the most important distinctions between salaried and hourly workers. Whereas salaried employees are generally offered at least one week per year of paid vacation, hourly workers, including contractors, do not get paid if they don't work. Although vacation time can sometimes be arranged, depending on the individual employer, hourly workers must accept time off without pay if they want to go on vacation.

Type of Work

Salaried jobs are often supervisory or managerial in nature, whereas hourly jobs usually involve some kind of service or production, such as manufacturing or manual labour. Employers often add the cost of the hourly worker to the customer's price, whereas salaries are often categorised as business expenses.

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