To convert an annual salary into the equivalent hourly wage, calculate the number of weeks worked per year, multiply it by the number of hours worked per week, and divide the annual salary by the result. Converting from a salary to hourly pay helps employers determine fair wages for employees.
Find the total number of weeks worked by adding the number of work weeks and number of paid vacation weeks. For example, an employee who works 50 weeks and gets 2 weeks paid vacation has an equivalent of 52 weeks worked.
Next, multiply the total work weeks by 40, which is the standard number of work hours per week. If the employee has a different length of working week, use the correct number instead. In this example, 52 multiplied by 40 equals 2080, the total number of hours worked per year.
Divide the annual salary by the total number of work hours per year to find the hourly rate. In the example, if the annual salary is $68,000, and the number of work hours 2,080, the hourly pay is $32.70 per hour. Underpaying employees can cause them to leave for better paying opportunities. Overpaying them on the other hand negatively affects profits. Employers are advised to consider what the competition is paying when determining a fair wage.