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Great Debate Hourly vs Salary

airport with airplanes and text printed as hourly vs salary Even Steven Money

My first real job out of college was working for a bank in their customer service 24-hour banking call center. I was paid hourly vs salary, to be quite honest I was extremely happy to have a job.

When I went into orientation I truthfully didn’t even know how much I was going to make, I did know that it was an hourly position and very similar to a teller or banker.

I have since gone through different positions within the bank and have grown up some and even seen a few different departments within the bank including both an hourly and salaried position.

Many of the positions offered in our department are hourly positions, they are still a good hourly/salary rate, but it got me thinking what is better hourly or salary?

Hourly vs Salary

little girl with puffed cheeks text the great debate

Hourly Pros

I have a lot of experience being an hourly worker, here are some of the pros and cons on a daily and weekly basis.

  • One of the first things I really like about hourly is having set hours. If I have set hours of 9-5, when the work day is done, it is done, I leave at 5:00 and my expectations are to drop everything I’m doing and pick up at 9:00 am the next day.
  • What comes with an Hourly Rate? Overtime, everyone’s favorite. If you need or want to stay and work on an extra project, you get paid overtime which is usually 1.5x your hourly rate and in some cases 2x, here comes the $$$.
  • Having a set schedule is a nice perk to have. Nobody expects you to stay till 8 pm to get the last report done and for some reason if you do stay late, many times you are a hero.

Hourly Cons

The Cons of being an hourly employee actually fit right beside the Pros.

  • While it is great to be able to leave at 5:00 pm, if you leave at 5:03 pm or come in at 9:03 am, every minute must be documented. If you decide to take a 35-minute lunch instead of that exact 30 minute, expect to explain why you did not adhere to your schedule. Not everyone is as overbearing or follows the HR handbook to the letter, but I’m sure you know someone out there who is.
  • Now this may not be entirely true, I need a little more research on the topic, but my general understanding is hourly employees earn less than salary employees. The main reason is an hourly employee is expected 40 hours per week with minimal overtime, while the salaried employee is expected to work over 40 hours each week usually 45-50, so this is calculated into the salary figure.
  • The prestige of having a salary. I remember during a meeting, many of the more tenured colleagues were pushing for a salary as this was seen as a higher ranking position and in many cases it is. Most salaried employees are managers, innovative leaders, and others who face clients and time crunches, expectations are higher.  Very seldom do you hear about the plumber who makes $150,000 a year, but rather it’s an hourly wage instead.  A blue collar worker in the factory, fast food employee, and a cashier at the hardware store are all hourly, these are not considered glamorous or prestigious positions.

Salary Pros

I have my fair share of experience as a salaried employee and also interact and work with salaried employees on a daily basis.

  • The salary position is often the career position, the mid-level manager, analyst, or CEO.  With this position comes greater responsibility and accountability for managing your activities and employees.
  • In many salaried positions there is a greater flexibility with time off, working from home, and early leave. During the summers some companies will offer an early leave Friday program to improve employee morale, this is not always available to an hourly employee.
  • Many times with a salaried position the overall bonus structure, vacation, and titles are much better.  Bonus structures are usually geared towards two types of employees: Sales, who are usually some form of salary and commission or commission only and Managers, who are usually salaried with an overall bonus program.

Salary Cons

  • The double-edged sword of getting paid more is you actually get paid less. Let’s say the salaried employee is paid $50,000 using this calculator it amounts to $24.04 working 40 hours.  Except when they start asking to stay a few extra hours like 10 per week and all of a sudden your hourly rate is $19.23 an hour. It’s possible an hourly employee could be making more per hour than a salaried employee.
  • You never really know when you are done for the day. Most of the items you work on are less task orientated and more big picture items, you can find yourself staying late because you are not sure exactly what ‘done with work’ actually means.  In some cases, the culture work is created to stay late. This can also make you look like the bad guy when you are going home at 5:00 pm, instead of 10:00 pm.

My Thoughts on Hourly vs Salary

man with beard scratching neck

Let me itch my beard and share my thoughts

Overall I think both an hourly position and salary have equally good benefits. One thing that always sticks in my mind is when people share with me that they are salary and I tell them that I am hourly, they always seem to want to go back to 40 hour week weeks and the possibility of overtime.

While I cannot control my current position and if I am hourly or salary, I would suggest next time you are offered a position to really look at what they are offering. Talk with multiple sources. It could turn out that you value having a start and an end time rather than staying late.

For me, it was great to walk away and realize the financial world would not crumble!  Leaving right at 5:00 certainly has its perks. Remember the work will be there tomorrow, I’m sure of it.

Are you an hourly or salaried employee?

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