Salary vs. Hourly Pay: Pros, Cons and Which To Choose
Written by
Rudri Patel
Edited by
Elizabeth Constantineau
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Trying to choose between salary vs. hourly work? Both offer unique advantages and drawbacks that can affect everything from your paycheck to your schedule. Read on to learn how they compare — and how to figure out which one fits your lifestyle and goals.
What Is a Salary and How Does It Work?
A salary is a fixed and recurring payment employers pay their workers. It’s usually in biweekly or monthly installments over a year. Employers base the amount of each paycheck on a fraction of the total salary.
- Minimum threshold for a salary:
- The Department of Labor states that an employer must pay a standard minimum of $684 per week to qualify for a salary.
- Excluded from salary minimum:
- The standard minimum excludes teachers, medical, outside sales and law enforcement employees.
Good To Know
Employers can apply bonuses or commissions to meet up to 10% of the minimum salary for exempt status. If the total isn’t met within the year, they have one more pay period to make up the difference.
What Is Hourly Pay and How Is It Calculated?
An hourly wage is an amount that an employer pays an employee per hour of work. Unlike a salary, you do not have a fixed annual income, and the amount you receive may vary between paychecks.
Here are some key points to know:
- The minimum hourly wage in the United States, as set by the federal government, is $7.25 per hour.
- Since some states also have minimum wage requirements, the U.S. Department of Labor requires that employees receive the higher of the two minimum wages.
Salary vs. Hourly Pay: Differences at a Glance
| Pay Type | Definition | Key Government Benchmarks |
|---|---|---|
| Salary | -Fixed pay on a weekly, biweekly or monthly basis -Not tied to exact hours worked -Often includes benefits like health care, PTO, etc. |
-$684 per week or $35,568 per year to be overtime-exempt under federal law -Not all salaried workers are exempt — it depends on job duties and pay level |
| Hourly | -Pay based on hours worked -Eligible for overtime pay beyond 40 hours per week -May or may not include benefits |
-Federal minimum wage: $7.25 per hour -Many states and cities have higher local minimums |
Pros and Cons of Salary vs. Hourly Pay
If you’re deciding between a salaried position vs. an hourly paid job, it can help to weigh the pros and cons.
Salary Pros
- Fixed income
- Easier to budget
- May include paid holidays or PTO
- Often includes benefits
Salary Cons
- No overtime pay
- May include extra, unpaid hours
- Hard to track work-life boundaries
- Fixed pay regardless of workload
Hourly Pros
- Overtime pay is available
- Flexible in scheduling
- Ability to maintain work-life boundaries
Hourly Cons
- Unpredictable income
- Fewer benefits
- No pay for missed time
Features of Salary vs. Hourly Jobs
If you want to compare features of salary vs. hourly jobs, here is a breakdown:
| Feature | Salary | Hourly |
|---|---|---|
| Pay frequency | Fixed, biweekly or monthly | Varies by hours worked |
| Overtime pay | Rarely included | Paid at 1.5x regular rate |
| Paid time off | Common | Less likely |
| Job flexibility | Less flexible | More flexible |
| Income stability | High | Low |
Deciding Between Higher-Paying Salary Jobs and Side Hustles
To decide between a higher-paying job or a side hustle, you’ll have to evaluate your goals beyond a paycheck.
- Looking for a short-term burst of cash? An hourly job will offer you both flexibility and the ability to earn more if that is what you need.
- Would you like job stability, benefits and the possibility of a promotion? A higher-paying job is a better choice in this situation.
Think about the following questions and your answers before deciding which route to follow:
- Does this job pay enough to meet my monthly expenses?
- Is there room for promotion or pay raises?
- Can I balance my job with family, school or other responsibilities?
- What are the skills I can gain to help me move into a better job or launch a business?
What Types of Jobs Are Usually Salary vs. Hourly?
Wondering what types of jobs are salary or hourly? And what are the benefits and expectations tied to each role? Check out this table to decide which type of position is best for you.
| Pay Type | Common Job Examples | Typical Benefits | Expectations |
|---|---|---|---|
| Salary | -Managers -Teachers -Accountants -Software engineers |
-Health insurance -Salary -PTO -Retirement plans -Possibility of annual raises -Potential for promotions |
-Full-time hours -May have to work beyond 40 hours -Performance-based expectations -Exempt from overtime |
| Hourly | -Retail clerks -Food service workers -Warehouse staff |
-Flexibility -Can work more if you choose -May or may not include benefits |
-Eligible for overtime -Shift-based work -Pay tied to hours worked |
Salary vs. Hourly: Which One Should You Choose?
Weigh the answers to these questions and decide what works best for you:
- Need a steady, predictable paycheck? Go with salary
- Want a flexible schedule or part-time work? Consider hourly
- Hoping for benefits like health insurance, paid holidays and time off? You’re more likely to get them with a salary
- Willing to work extra hours for more pay? That’s where hourly shines
Final Take
The right pay structure depends on your current needs and career goals. Hourly work can be a great fit if you want flexibility or are working part-time — especially as a student or during semi-retirement. On the other hand, a salaried job often brings more stability and benefits, which may be better for building a long-term career. Think through your priorities and choose the option that offers the best mix of income, flexibility and financial security for where you are now.
FAQ
Here are the answers to some of the most frequently asked questions about salary vs. hourly jobs.- Is it better to be paid hourly or salary?
- It depends on your priorities. Salary offers steady pay and benefits, while hourly roles may give you more flexibility and the change to earn extra through overtime.
- Do hourly employees get benefits?
- Sometimes. Hourly workers can get benefits but it's less common. It usually depends on how many hours you work and your employer's policies.
- Can salaried employees get overtime?
- Not usually. Most salaried employees don't qualify for overtime unless they're considered nonexempt under the Fair Labor Standards Act.
- How do I decide between a salary and an hourly job?
- Think about what matters most to you.
- If you value consistent income and benefits, salary might be the way to go.
- If you prefer flexibility or want to earn more through extra hours, hourly could be a better fit.
Hiba Boutary contributed to the reporting for this article.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- U.S. Department of Labor. "Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)."
- U.S. Department of Labor. "Minimum Wage."
- U.S. Department of Labor. "Overtime Pay."
- U.S. Department of Labor. "Earnings thresholds for the Executive, Administrative, and Professional exemption from minimum wage and overtime protections under the FLSA."
