Salary vs. Hourly: What's the Difference?

Find out the best way to get paid

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Salaried employees earn regular paychecks, even if they work long days during busy periods, while hourly wage employees are paid according to how many hours they work, and they may be eligible for overtime pay when they work beyond the standard 40-hour workweek.

Key Takeaways

  • Hourly pay may allow employees to work overtime hours, but they can also see pay cuts if they aren't able to work as many hours in a week as they expected.
  • Salaried employees enjoy consistent paychecks, and they're more likely to get comprehensive benefits packages, but they may be pressured to put in extra work without overtime pay.
  • Assessing your working style and the office culture can help you decide whether hourly or salary pay is better for you.

What's the Difference Between Salary and Hourly Pay?

According to a Department of Labor doctrine known as the Fair Labor Standards Act (FLSA), hourly employees eligible for overtime are classified as "non-exempt," while hourly workers ineligible for overtime pay are classified as "exempt." According to the U.S. Department of Labor's Wage and Hour Division, employees considered "exempt" must satisfy the following requirements, depending on the type of exemption:

  • They must earn at least $684 per week (a salaried equivalent of $35,568 per year).
  • They must work in an executive, administrative, professional, computer, or external sales position.
  • They must have the authority to make significant decisions independently.
  • They must have the discretion to create and implement company policies.
  • They must occupy management roles, where they oversee other staffers.


Employees who are considered "non-exempt" are protected by FLSA regulations concerning minimum wage and overtime compensation.

Non-exempt employees are entitled to collect time-and-a-half (1.5 times their regular hourly pay rate) for every hour worked over the standard 40-hour workweek.

Such non-exempt workers are responsible for recording their hours worked.

Which Is Right for You: Salary or Hourly?

To figure out whether salary or hourly pay is right for you, consider these factors.

When Hourly Pay Works Best

Hourly employees can significantly ratchet up their weekly pay by lobbying for extra hours. After all, employers naturally wish to give additional hours to their hungriest staffers. Furthermore, some hourly employees have the fortune of working for companies that pay employees double their regular hourly rate for working on holidays.

Salaried employees are not eligible to collect overtime pay when they work weekends and late nights to accomplish major projects. Furthermore, the office culture may pressure salaried employees to overextend themselves in order to compete with colleagues. In other words, salaried jobs can be significantly more stressful than hourly jobs.

When Salaries Work Best

Salaried employees enjoy the security of steady paychecks, and they tend to pull in higher overall income than hourly workers. They typically have greater access to benefits packages, bonuses, and paid vacation time.

Some companies keep costs down by disallowing hourly employees from working overtime. Hourly employees can sometimes fall short of their traditional 40-hour workweeks if business is slow and they are dismissed early. Hourly employees seldom enjoy the bonuses, insurance plans, and retirement plans that are traditionally afforded to salaried employees.

The Bottom Line

Whether a worker prefers an hourly position or a salaried position largely depends on his or her temperament and personal working styles.

While some workers favor the security of a regular paycheck, others prefer knowing when they'll clock out at the end of the day and delight in earning extra pay for working overtime hours.

Frequently Asked Questions (FAQs)

Is it better to get paid hourly or salary?

Hourly pay isn't necessarily better or worse than salary pay. Each person has to decide what's the best fit for them. Your temperament, work preferences, and the company you work for will help determine whether you should seek hourly or salary pay.

What is a decent salary?

The mean annual wage for all workers in the U.S. was about $58,000 in May 2021. That could be considered the baseline for a "decent" or "average" salary, though the real average salary will depend on where you live and what you do for work.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Labor. "Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA)."

  2. Department of Labor. "Final Rule: Regular Rate Under the Fair Labor Standards Act."

  3. Department of Labor. "Overtime Pay."

  4. Bureau of Labor Statistics. "May 2021 National Occupational Employment and Wage Estimates United States."

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