It was here at our lovely SDMB that I once saw someone post a handy-dandy formula to convert an hourly wage to yearly salary (assuming 40hr/week) and vice versa.
Whoever posted it admitted it wasn’t exact but that it was pretty darn close. It was a simple easy to remember formula- which was what made up for it not quite being exact. I saw it and thought to myself “Huh, that’s handy, I’ll have to make sure I remember that.” Anyway …I didn’t remember it.
And it wasn’t the Thread topic, it was just a bit o’ trivia thrown in. So, I haven’t bothered to search for it.
Any help? You don’t have to be the same poster who offered it in the first place and you don’t have to offer up the same formula (since I don’t remember it anyway). I’d love to hear from anyone who can offer a simple conversion.
You can usually figure people work about 2000 hours a year.
So, the quick formula is to divide by 2.
Make 60k per year, it’s $30/hr.
Just to be clear, that’s the ‘quick and dirty formula’. I’m not saying it’s always true, but it works pretty well. In some cases they might make less and make it up in overtime, they might be on salary and work 60 hours a week. They might not get vacation and work closer to 2100 hours per year. But that’s the trick to get close.
2 weeks vacation is a customary thing with many salaried jobs in the US, so many of us subtract 2 weeks (40 x 2=80) pay from a yearly calculation of wages to reflect the actual hours worked better.
Of course this also means that many people (myself included) think that even non-salary job should include a modicum of vacation time, so that 2000 hours should be the standard “work-year”; in many ways the laws of the US make that notion official (ERISA, for example).
I’d say it depends on the type of job. If you get paid vacation, go with the 2080 number, if you don’t, probably safer to go with 2000 and if you take less than 2 weeks off, treat anything above that as a bonus. Regardless, the simple napkin math is simple for the 2080 number too. Since it’s an extra 4%, just double the number, then add a 1k for every 25k. As an example, say you may $25/hr, you double that to $50k, and since 50 is 25x2, you add 2k and thus $25/hr = $52k/yr. Any rough estimate for numbers not evenly divisible by 25 will be off by maybe a couple hundred, which is plenty for negotiating your salary or, if you’re so inclined, discussing with others.
That all said, if you’re negotiating a salary, I’d generally suggest going with weekly or biweekly estimates instead, since that’s a number that’s going to mean more to you. That is, even if you work out two numbers and know that, say, you’ll make $10k/yr more at a new job, but need to compare expenses to see if it’s worth changing, I think seeing how much more will show up in a typical paycheck makes it make a lot more sense. A number like that easily sounds like it may pay for more commuting expense or something, but when evaluating it on a weekly basis, realizing that it’s more like $130 a week after taxes, it puts it in a typical budget range that one can work with. But a good number for that is difficult, since tax burdens and other things like retirement and health insurance will also come out of your pay before it gets into your bank account.
You’re right and many people don’t take a vacation or work exactly 40 hours a week or whatever. But if you want a quick formula, that’s it. The job offer is $15/hr at 40 hours per week and you can figure on making about 30k per year. It’s just an easy way to do the math in your head while you’re sitting there.
Or your friend says that he’s making 45k/year and you can easily work that out to about $22.50/hr to compare apples to apples.
It’s not meant to be exact, it’s just meant as a quick way to move back and forth in your head between the two numbers.
<nitpick>
2080 is the minimum. Depending on what day of the week January 1st falls, and depending on whether it’s a leap year or not, the actual number of workday hours could be 2080 or 2088 or 2096. The mean is 2087.1 and the median is 2088. If you want to round it off to 3 significant digits, you’d get 2090, not 2080.
</nitpick>
Why would you care about “actual hours worked”? That’s not how you get paid.
If you have a white collar job with benefits (like paid sick days, paid holidays, paid vacation days), then in most years you get paid for working 2,088 hours even though you actually worked about 1,800. But really neither of those numbers matter because you’re getting a flat annual salary (unless you took unpaid personal leave or got some time-and-a-half overtime).
But if you have a blue collar job without benefits, no paid days off, then you only get paid by the hours that you actually showed up, hence you don’t get paid on days you were sick or on days when the business was closed for a holiday. But you DO get paid time-and-a-half for overtime. So you might work 1,800 hours and get paid for 1,900.
And don’t get me started on bosses and supervisors, who work 50, 60, even 70 hours per week, and never get any time-and-a-half, so they get credit for working just 2088 hours even though they really worked about 3,000.
Bottom line is that, if your boss says “We’ve been paying you $14 per hour and now we’re gonna pay you $15 per hour” then you’re probably one of those people who works 1,800 and gets paid for working 1,900, so your total annual salary will end up being about $1,900 higher than it was before. If you use the quick-and-dirty 2x formula, you’d think you’re getting $2,000 more, which is a little too optimistic. But if your boss says “Last year we paid you $32,000 but this year we’re gonna pay you $34,000” then you’re probably one of those people who actually works 1,800 hours but get paid for working 2,088 so the quick-and-dirty formula tells you you’re getting an extra dollar per hour but really it’s more like 96 cents per weekday hour. So either way, the quick-and-dirty formula is slightly optimistic.
If you’re a supervisor, the formula is waaay too optimistic.
The 2000 hours a week also figures in holidays if you don’t get paid for them. Many states (all of them?) require pay for statutory holidays, though.
The X2000 number is to get a rough sense what someone makes, gross pay. being off by 80 or 90 in 2000 is not a lot - it’s around 4 percent. You’re probably kicking around numbers like “he makes $42,000 a year” (or $21/hour) so a few percent does not matter, unless you’re the IRS and every penny matters. Note in this case, 2080 gives $42,176 a year. Does that extra $176 a year matter when you are comparing salaries, etc.?
If you are lucky enough to have a job with paid holidays, but that’s not because it’s required by state law. Walk down to the local muffler shop and ask the guy sweeping the floor if he gets paid holidays.
I agree. I don’t know any states that require paid holidays. Case in point, Oregon does not require employers to give paid holidays or paid vacations and they only require paid sick days if you have more than 10 employees. Even state government employees are sometimes forced to take “furlough” days where they don’t get paid.
I don’t follow your math there. 2,000 x $21 = $42,000 and 2,080 x $21 = $43,680. That’s a difference of $1,680 – not $176.
But it’s not a question of 2,000 vs. 2,080. It’s a question of 1,800 vs 2,088.
Nobody works 2080 hours in a year. If you take 8 hours per day and multiply it by how many Mondays, Tuesdays, Wednesday, Thursdays, and Fridays there are in a year, you either get 2080 or 2088 or 2096 but nobody actually works precisely those hours. People take sick days. They stay home on holidays. They go on vacations. And if you’re getting paid by the hour, you probably don’t get paid for any of that but maybe you get some time-and-a-half overtime. Most “full time” people actually work about 1,800 hours in a year.
Suppose you get two job offers. One says “$21 per hour” and the other says “$42,000 per year”. Which is the better deal? If you use the quick-and-dirty formula and think “It’s the same thing” you’re wrong. The 21-per-hour job almost certainly doesn’t give you any paid days off, so you only get paid for the 1,800 hours you’re actually gonna work, plus a little time-and-a-half for overtime here and there. 21x1800= $37,800 plus overtime, so maybe you end up with $39,000. But the 42-per-year job almost certainly includes paid days off. You’ll still work the same 1,800 hours but you’ll get paid as if you had worked 2,088 hours. It’s only $20.11 per hour, but you’re getting paid for every weekday hour in the whole year including 288 hours that you didn’t actually work. You end up with $42,000.
So, would you rather have $39,000 or $42,000? Tell me you don’t care about the $3,000 difference.
The IRS allows rounding on Form 1040 but not on Form 941 (the payroll taxes form which is filled out by the employer) or Form W2. Payroll taxes must be calculated to the penny.