The Great Debate: Hourly vs Salary
Here is another one of my newly formed The Great Debate series, make sure to check out the Great Coffee Debate as well. My first real job out of college was working for a bank in their customer service 24 hour banking call center(give me a beer and I can tell you some stories), 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, plus a nice little hiatus down in Florida. 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? Here’s a simple breakdown of the pros and cons associated with The Great Debate: Hourly vs Salary……………………..
I have a lot of experience being an hourly worker, I go through 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 it’s great 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 that 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 8pm to get the last report done and for some reason if you do stay late, many times you are a hero.
- Many of 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, taking a 35 minute lunch instead of that exact 30 minute expected lunch, right that down and 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 being 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.
- One of the Cons that popped in my head is the prestige of having a salary. I remember during a meeting, many of the more tenured employees 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, leaders, and others who face clients and time crunches, while expectations are higher. Very seldom do you hear about the plumber who makes 150K a year, but rather it’s an hourly wage instead. The blue collar worker in the factory, the fast food employee, and the cashier at the hardware store are all hourly, these are not considered glamorous or prestigious positions.
While I don’t have a great deal of experience as a salaried employee, I do interact and work with salaried employees on a daily basis, that and Mrs. Even Steven Money also receives a salary and I talk with her every day.
- 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 moral, 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 salary with an overall bonus program, this is usually tied to influencing and leading the team to better results.
- The double edged sword of getting paid more is you actually get paid less, here’s what I mean. Let’s say the salaried employee is paid 50K 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 which isn’t so good with all the extra work they have been asking from you.
- You never really know when you are done for the day? Since 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 a cultural is created to stay late, which makes you look like the bad guy when you are going home at 5:00, when everyone is heading out at 10:00 to show they are part of the team.
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 and talk with multiple sources. It could turn out that like me, when I walk away for a nice long lunch, the financial world will not crumble and leaving at 5:00 feels great because you know what? The work will always be there tomorrow, until I retire that is!!!!
Whether you are an hourly or salaried employee it’s important to know where you stand financially. Getting the big picture all in one place with Personal Capital has really helped me see what I can do with my finances today and in the future. If you don’t know where you are today, how do you know where you are going in the future? If you’re looking for a great way to track your net worth, analyze your portfolio fees, manage your cash flow, and get a handle on your finances for today and the future, sign up with Personal Capital today.
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