If You Make $30K a Year, How Much Is That per Hour?
Quickly converting between different pay structures isn’t always easy. For instance, someone who makes $30,000 per year may be curious to know what that salary equates to at an hourly basis.
The good news is that you don’t need a fancy salary calculator to figure it out. Instead, with some simple tips and tricks, you’ll have everything you need to convert annual salaries to hourly ones and back again with minimal effort.
Converting a $30K Annual Salary to an Hourly Rate
Converting an annual salary to an hourly rate can initially be a little tricky because there are a few variables that affect the result, such as:
- State and federal income tax withholding
- The number of hours you work per week
- The number of days off you have each year
- Whether or not the job offers overtime pay
- Payroll deductions like retirement account contributions
- Cash bonuses and other monetary benefits
However, we can get a pretty good approximate conversion from annual to hourly pay by making some simple assumptions. For this example, let’s assume we’re talking about a 40-hour-per-week job with two weeks off per year. Let’s also assume we’re talking about pre-tax income and ignoring other paycheck deductions like retirement account contributions.
Given these assumptions, a $30,000 annual salary would equate to $15 an hour. If you want to see the math behind that, it looks like this:
$30,000 ÷ 50 working weeks = $600 per week
$600 ÷ 40 working hours = $15 per hour
Not everyone making $30k per year will necessarily make exactly $15 per hour. For instance, if you work more than 40 hours per week on average or more than 50 weeks per year, $30k a year will equal less than $15 an hour. Alternatively, if you earn $30k a year working fewer than 50 weeks or under 40 hours a week, your hourly rate is likely higher than $15 an hour.
The calculation will vary based on each person’s situation. Still, this number should give you a pretty good idea of what to expect.
Converting Other Common Salaries to Hourly Rates
Now we can apply this same formula to see how it pans out for other amounts. Below are a few different yearly salary levels and how each translates to an hourly wage. In each case, we make the same assumptions as above regarding the number of days and hours worked.
- $20,000 per year is $10 per hour
- $40,000 per year is $20 per hour
- $50,000 per year is $25 per hour
- $60,000 per year is $30 per hour
- $70,000 per year is $35 per hour
- $80,000 per year is $40 per hour
- $90,000 per year is $45 per hour
- $100,000 per year is $50 per hour
- $110,000 per year is $55 per hour
- $120,000 per year is $60 per hour
As you can see, each increment of $10K per year in gross income equates to an additional $5 to the hourly pay rate. Of course, for a salaried employee, several more factors often contribute to total compensation and take-home pay than an hourly rate. Still, this is generally what the conversion will look like.
Other Considerations for Hourly and Annual Wages
While these calculations can give us rough estimates when we separate out some of the other variables, it’s still worth looking at those variables and how they affect hourly pay. If you are using these quick techniques to understand how your salary breaks down, you may also want to consider a few of these factors first.
Number of Working Hours
One of the most significant discrepancies between annual and hourly pay is how many hours go into the working year.
Part-time employees earning a particular hourly pay will make a very different average salary than someone who works full-time or beyond.
Many professions vary in weekly hours at different times of the year. Some jobs only exist in a seasonal capacity, and others have peak seasons and slow periods. As a result, things like overtime pay and how you choose to calculate the time out of work can lead to different results.
Similarly, different jobs offer a wide range of available vacation days, holiday pay, and other paid time off (PTO). Including these days in your wage calculations or discounting them can also tip the scales.
One thing that makes converting annual and hourly salaries especially tricky is that salaried employees often have a variety of benefits that hourly employees may not.
In many hourly jobs, the base pay itself makes up the extent of your remuneration. On the other hand, salaried roles may offer several monetary benefits beyond a base salary, such as:
- Health insurance
- Annual cash bonuses
- Performance bonuses and incentives
- Signing bonuses
- Restricted stock units (RSUs) and other stock options
- Employee stock purchase plans (ESPPs)
- Housing and relocation compensation
All these things contribute to total annual pay and will show up on an employee’s taxes as income. But how do they impact your hourly rate? Do you divide your yearly bonus by the hours you worked that year? Does a signing bonus only count toward your hours for the first year? How on Earth do you factor in health insurance?
There are no correct answers to these questions, but each affects your wage conversion. Therefore, however you decide to count, subtract, or divide any of these factors, their impact on the final result is worth considering.
In the same way that many jobs pay in more ways than an hourly rate, most jobs also cost money in various ways.
In the book, “Your Money or Your Life,” Vicki Robin and Joe Dominguez advise tallying up the various ways your work costs you additional time and money, and calculating that into your hourly wage.
For instance, buying certain clothes or outfits for your job, such as a uniform or other business attire, usually costs money. Likewise, commuting to your job costs both time and money. Work outings such as happy hours and events may also cost more of your personal time and money.
According to Robin and Dominguez, to better understand your true wage, you need to subtract these costs from your salary and add the time to your hours worked.
These factors don’t necessarily work differently between annual and hourly paid jobs. Still, they affect how you understand and calculate your pay, so it is worth reviewing these impacts.
One thing that does not significantly affect annual to hourly pay is pay periods. Different jobs may pay their employees weekly, bi-weekly, semi-monthly, monthly, or otherwise.
This cadence naturally impacts the size of each paycheck, as each pay period includes a different number of hours. However, the number of pay periods in a year does not directly change how many hours you work or what the job pays for each hour.
Therefore, while it may feel like your weekly or monthly salary impacts your annual salary, these numbers are primarily fixed relative to one another.
How To Convert Hourly To Annual Pay
If you would like to learn how to calculate these conversions yourself, the good news is it’s pretty straightforward. All you need to do is divide the annual pay rate by the total number of hours worked, and you have hourly pay:
Annual salary ÷ Hours worked per year = Hourly pay
Sticking with our assumptions, a typical full-time employee works a 40-hour workweek for 50 weeks a year with two weeks off. Therefore, the total number of annual hours on the job will be:
40 hours x 50 weeks = 2,000 hours per year
We now have everything we need to convert annual to hourly pay. All we need to do is take the salary and divide it by 2,000. Here’s a helpful trick to do it without a calculator: Take the total salary amount, take three 0s off the end, and cut the result in half. For example:
$34,000 per year » $34 » $17 per hour
$52,500 per year » $52.50 » $26.25 per hour
To convert an hourly rate to annual gross pay, you can do the same trick in reverse. That is, double the number and add three 0s. This technique will give you an estimate of what that hourly rate will earn you after 2,000 hours. For example:
$18 per hour » $36 » $36,000 per year
$24 per hour » $48 » $48,000 per year
Calculating hourly wages and salaries this way won’t always be perfect. Still, it is a quick and easy way to get a helpful estimate.
Understanding Hourly and Annual Pay
Whether you make $30k a year or any other annual wage, you should now have everything you need to understand your hourly salary. From minimum wage to a median household income and beyond, converting back and forth from annual to hourly is pretty simple once you know how to do it.
With the 2,000-hours trick, you can also impress your friends by becoming a walking wage calculator. This technique can help you quickly determine what anyone earns over different periods, so you can always understand the relationship between annual and hourly pay.
This article was produced and syndicated by Wealth of Geeks.
Sam is the founder of the personal finance and self-improvement blog Smarter and Harder. His mission is to start exciting new conversations that empower people to improve their work, lives, and money, and hopefully have a fantastic time doing it. In all things, he strives to lead with positivity, understanding, and more than a bit of enthusiasm.