Salary or Hourly pay


When choosing between a salary-job and an hourly job, people usually base their choice on their personal priorities and lifestyle choices. Both choices have pros and cons that can have a big effect on your financial stability and work-life balance. Knowing the difference between salary and hourly pay can help you make a decision that fits your career goals and personal situation.  (Salary or Hourly Pay Employee).

Who earns a Salary?

An employee earning a salary, such as a marketing manager at a large corporation, enjoys the security of a fixed income, either monthly or, in some cases, yearly. This salary is paid consistently every two weeks and can also be calculated annually for a broader perspective. 

Salaried employees are often referred to as full-time employees and are continually enrolled in the company’s benefit schemes, such as health insurance, leave bonuses, and access to a dedicated working space.  

A salary earner receives the same amount each time the paycheck arrives, except the employer reviews the terms and conditions of employment. This also means that there is no hourly limit to working time. Even though most working hours will usually fall between 8:00 a.m. and 5:00 p.m., an employee is expected to be at work at all times, even if they are done with all the activities for the day or the monthly target.  

Who is an hourly employee?

An hourly employee has the flexibility to earn a wage based on the actual number of hours they spend on their assigned job/role. This freedom allows them to control their earnings, with each hour spent working contributing to their paycheck. 

Practically, if an hourly employee is to be paid 15 dollars per hour- then spending 20 hours at work in one week means that they will be paid 300 dollars at the end of that week for the job that has been done. I.e 

1 hour15 dollars
20 hours(20 hours)(15 dollars) 
Total300 dollars
Breakdown of Hourly Pay

An hourly employee might have varying paychecks depending on the hours committed to the work done. This is because the employer pays for the hours devoted to doing the work. Most employers agree with hourly employees on the maximum amount of hours they are expected to work, and demanding extra work hours will attract an additional amount to the agreed hourly pay. 

This additional amount often refers to ‘overtime pay ‘, and it is usually higher than the regular hourly rate. Most hourly employees will likely get extra dollars per hour for every overtime done and for coming to work during national and public holidays. 

An hourly employee is expected to use a timesheet or other register system to log their total hours spent during the work. This is a crucial part of the job, as it helps the employer keep track of the hours worked and ensures that the employee is paid accurately for their time. (Salary or Hourly Pay Employee).

Pros and Cons of salary and hourly pay 

It is not unbelievable that someone else considers an advantage to be something that someone else finds discomforting. While some will like the adventurous uncertainties of the hourly pay, which allows them to work extra time and for some more dollars, some will love to plan their spending with an anticipated amount in their paycheck. However, Let us look at a few advantages and disadvantages of being a Salary or Hourly Pay Employee.

Pros of Earning an Income through Salary

  1. Access to Health Insurance – Salary earners are most likely considered stakeholders in the effective running of the organization, and most employers will usually provide health insurance that covers both the employee and their nuclear family members. This might not cover high-end medical procedures like organ transplants
  2. Maternity Leave with Payment—Most employers are making provisions for their employees who have just delivered their baby. The payment agreement and duration of leave might vary from place to place, but this is fast becoming a part of the ecosystem of salary employees.
  3. Budget culture friendly—The fact that salary earners can predict their income makes it easier for them to plan their expenses before they receive their pay. This also makes it easier for them to acquire credit because a significant part of determining a credit score is the ability of the borrower to repay. 
  4. Structured retirement plan—Many companies provide a 401(k) plan, which is a type of employer-backed retirement plan in the United States, or any other employer-backed retirement plan, allowing their salaried employees to fund their retirement purses alongside extra funding from the organization. 
  5. More excellent prospects in their career path—The Organization often considers its salaried employees the central employees. This positions them for scheduled promotions and increased salary offers as they advance in the organisational ladder. 

Cons of Earning an Income through Salary

  1. Unaccounted extra-time of work – A salaried employee has at least 9 hours of weekly hours that are not paid for. Research conducted by ADP Research Institute verifies this. When salaried employees are remote or hybrid workers, they even have their work time creep into their personal affairs. 
  2. Difficulty separating work and life – Most salaried employees find it difficult to separate their work from their personal lives because they usually have a lot of tasks allocated to them without a designated working time. This also means that they have to be present at work at times when it is inconvenient to finish a project. 
  3. Salary renegotiation is always tricky – Most organizations or employers will not discuss salary renegotiation or will only discuss it when considering employee promotion. If the employer needs to get more done, they will give their employee more tasks. After all, most salaried employees do not get to negotiate the quantity of jobs allotted to them before employment. 

Pros of earning an hourly income

Salary or Hourly pay
  1. Extra hours are accounted for and compensated for – An hourly employee will be paid based on the agreement for each adequately accounted-for hour. This can be juicier with a payment of 1.5 times the original agreed amount once the working hours have exceeded forty hours in the week. In the long run, a hardworking hourly employee might make enough and even more than a salaried employee. 
  2. Freedom to work remotely and take multiple jobs – Hourly employees who are either freelancers or contractors can negotiate their work location with their employees. They also have the luxury of taking on other jobs if they can complete their task within the allotted time. 
  3. Reasonable work-life balance—Hourly employees do not feel any need to be overly accountable to their employer. After they have completed the task, they can spend the remaining part of their time with their family and those they love. This also allows them to combine work and schooling. 

Cons of Earning an Hourly Income

  1. Less likely to enjoy health care insurance and benefits–Most employers do not consider hourly employees as a part of the organization entitled to benefits like health care insurance and retirement plans. Thus, hourly employees have to put away a portion of their income to adequately cater for health insurance and investments that can cater for them when they are older. 
  2. Difficulty in furthering a career path – The nature of the work of an hourly employer is like going on a date with someone but will never meet each other again. In most cases, the work hours and the pay are the only relationships between the employer and the employee. Hence, it is more unrealistic for an employee to further their career as an hourly pay employee. 

Note- Add your hourly job to your CV because it’s part of your work experience.  

  1. Fluctuating income – The income an hourly employee makes is completely tied to the number of hours that they work. This means that if the employer does not need the service of an employee for more than half of the duration he is anticipating, then his income is automatically reduced. Another downside is that when it comes to laying off taffs during economic downtime. Hourly employees are more likely to be laid off before salaried employees.

Final Note

Many would indeed prefer the job security that comes with being a salaried employee, but this does not mean that some will not still consider the opportunities of being an hourly employee. This blog post will help you through your chosen work-life path (Salary or Hourly Pay Employee).