What’s the Difference Between Salary and Hourly Wage?

On the hunt for a new job and wondering if you should look for a salaried position or an hourly one?

 

You’ve come to the right spot.

 

Keep reading to learn some of the key differences between earning a salary versus an hourly wage — and how to pick the proper compensation structure for your needs.

 

Salary vs. Hourly Wage: Key differences

 

When you’re a salaried employee, you earn a fixed amount of money each year, paid out in regular intervals, such as bi-weekly or monthly.

 

The good news is your pay isn’t tied to how many hours you work each week. Whether you work 40 hours or 50, your salary stays the same. This gives you a stable paycheck you can count on each month.

 

The bad news? In a salaried position, you may be required to work more than 40 hours a week without being paid more or having the option to earn overtime.

 

For example, hotel managers are usually salaried. Their compensation is typically fixed and paid over a specified period. This is because their job isn’t strictly operational — it also requires greater responsibilities, such as people management, experience with hospitality software, and guest services, which can involve longer hours. 

 

When you’re an hourly employee, you earn money based on how many hours you work. You usually clock in and get paid for each hour, and you earn more if you work more. 

 

As an hourly worker, you’re protected by minimum wage laws and are usually entitled to overtime pay for any hours you work beyond the standard 40-hour threshold. But your shifts and hours can vary unless you accept a full-time position. This means the amount of money you make will always fluctuate.

 

Jobs like medical couriers, for example, are typically paid hourly since their compensation is tied to the number of hours they work. Of course — there are always exceptions. Medical couriers can also earn salaries or work as independent contractors paid per delivery. 

 

Differences in Employment Contracts and Legal Definitions

 

Pay attention to your future employment contracts and the legal definitions within them. Your employment contract will state whether you’re classified as an exempt or a non-exempt employee. 

 

For example, exempt employees, usually salaried, aren’t entitled to overtime pay. 

 

Non-exempt employees, often paid hourly, are typically protected by laws that guarantee overtime compensation. 

 

Read your employment contract (and check labor laws) carefully before signing it to make sure you’re on the same page with the organization that’s hiring you.

 

Examples of Salaried vs. Hourly Positions

 

Here are some quick examples of salaried versus hourly positions. 

 

Salaried Positions

 

Salaried roles often involve higher-level responsibilities and decision-making. These jobs include management and professional positions where you’re expected to focus on overall performance — instead of how many hours you’ve worked.

 

Some examples of salaried positions include:

 

• Restaurant Managers: Oversee operations, manage staff, and handle long-term sales strategies. 

 

• Marketing Directors: Develop campaigns, manage budgets, and lead teams to achieve business and branding goals.

 

• Software Engineers: Design and develop software solutions for project managers, startups, and SaaS brands.

 

• HR Managers: Handle employee relations, facilitate hiring processes, and manage company-wide human resources policies.

 

These roles typically require consistent effort and dedication, regardless of how many hours you spend on them each week.

 

Hourly Positions

 

Hourly roles focus on completing specific routine tasks. They’re usually in industries where organizations need productive operational workers. The more hours you work, the more “productive” you are and the more money you make. 

 

Some examples of hourly positions include:

 

• Retail Workers: Help customers shop, stock shelves, and manage transactions, with shifts that vary from week to week.

 

• Concierge Services: Deliver goods or supplies, often paid based on hours worked or per delivery.

 

• Customer Service Representatives: Handle calls, assist customers, and resolve issues, often with scheduled shifts.

 

• Construction Workers: Perform physical labor on job sites, with pay tied to the hours spent on-site.

 

These positions are often more flexible and usually offer overtime pay.

 

Salary or Hourly Wage: Which One Should I Pick?

 

The job type you should choose depends on your unique situation and career goals. 

 

For example, if you’re wide open (time-wise) and are looking for consistent, stable income, consider applying for salaried positions. 

 

If you’re limited on time and just need a way to make some quick or extra cash on the side, consider applying for hourly positions. 

 

You should also consider your overarching career development goals. 

 

For instance, working as a salaried restaurant manager can help you learn the ropes if you’d like to open your restaurant someday. It can also give you a set income you can count on to save as much as possible and invest in your restaurant someday.

 

Or, if you’re currently building your own ecommerce store but need some extra cash to bootstrap it, you might work part-time hours at a local coffee shop. Or you might look for a virtual assistant role for an ecommerce business owner so you can learn more about building your online store. 

 

TL;DR: Look for roles that can support you in your current stage of life and help set you up for future success.

 

Frequently Asked Questions (FAQs)

 

How are salaried employees paid?

 

As a salaried employee, you’re paid a fixed amount over a year. This annual salary is divided into equal payments, like weekly or biweekly paychecks.

 

How do hourly wages work?

 

You earn money for every hour you work if you’re paid hourly. If you work more than 40 hours a week, you usually get paid overtime at a higher rate.

 

What is the difference between exempt and non-exempt employees?

 

Exempt employees, who are usually salaried, don’t qualify for overtime pay. Non-exempt employees, typically hourly, must be paid overtime when they work more than 40 hours a week, as the Fair Labor Standards Act requires.

 

Do hourly workers get benefits like health insurance?

 

It depends on the company. Full-time hourly workers might get benefits like health insurance, but part-time workers often don’t. Each company has its own rules.

 

How do overtime laws apply to salaried vs. hourly employees?

 

Salaried employees aren’t usually paid overtime, even if they work extra hours. On the other hand, hourly employees are entitled to overtime pay if they work more than their regular scheduled hours.

 

Wrap up 

 

So… which one will it be? Salaried or hourly? Feel free to print out this guide and make a pro/con list to help you decide. 

 

And if you need a percentage calculator to do some salary versus hourly math, we have a quick and easy one you can use here.

 

That’s it for now.

 

Good luck on your job hunt!

 

Author Bio:

 

 

Ioana Wilkinson

 

Ioana is a business strategist and content writer for B2B tech and SaaS brands. She also helps aspiring entrepreneurs build remote businesses. Born in Transylvania and raised in Texas, Ioana has been living the digital nomad life since 2016. When she’s not writing, you can catch her snorkeling, exploring, or enjoying a café con leche in Barcelona!