Salaried or Hourly Employment: Which is Better?


The marketplace is a world of contradictions for many consumers. Although March saw 126,000 jobs created, a recent Bankrate survey revealed that only 38 percent of Americans have enough savings to cover a surprise $500 expense. If job growth is up, why are so many families living paycheck to paycheck? Whether you’re spending too much on housing, paying off debt or supporting a large family, income is the primary concern. So, what’s the best way to earn a competitive wage? Read on to learn how salaried vs. hourly employment plays a role.

Hourly Employment

In 2012, there were 75.3 million hourly workers in the United States. Although the term “hourly” is often associated with minimum wage, these employees only accounted for 4.7 percent of the total. In reality, hourly workers populate a variety of professions, including contracting, state and local government services, manufacturing, education, health services and more.


  • Time management. Earning a predictable hourly wage allows you to adopt a regimented schedule. You’ll be paid for hours worked—no more, no less.
  • Overtime. According to the Fair Labor Standards Act (FLSA), employees are divided into two categories: exempt and non-exempt. Non-exempt employees are typically paid by the hour and must receive overtime for working more than 40 hours per week. In addition to making the most of your time, earning an hourly wage requires your employer to value your presence in the office as well.
  • Negotiability. Hourly workers who specialize in a particular field have the option of negotiating higher pay. For example, a Web designer living in Chicago earns an average salary of $68,408 per year. On the other hand, a freelancer with similar skills can charge more than $100 per hour. Assuming a full-time schedule, an hourly employee can earn a minimum of $208,000 per year.


  • Although hourly employees have fewer earning restrictions, they also carry greater risk. Unless you signed an employment contract, working for an hourly wage often raises the following questions:
    • How permanent is my job?
    • How many hours will I work this month? Next month?
    • How does an unreliable income affect my budget?



  • Lack of benefits. Employers are not required to provide health insurance coverage to contract and part-time workers. You’ll also miss out on paid time off, flexible spending accounts and merit-based bonuses. The sum of these forgotten perks could cost you thousands of dollars a year.

Salaried Employment

Salaried jobs are generally considered the most desirable form of employment, but there are two sides to every coin.


  • Job security. Salaried employees are full-time staff members, unlike hourly employees who may work on a temporary or contract basis. An established place in the workforce allows you to feel more confident about future earnings and the ability to maintain steady employment.
  • Guaranteed income. Steady employment means a steady income. Salaried employees can expect the same paycheck each month, providing predictable options for budgeting, spending and saving.
  • Likely benefits. Employers are required to offer healthcare coverage to full-time employees, a perk that could save your family thousands of dollars in medical expenses. In addition, you’re also likely to receive paid vacation time and sick leave.


  • No overtime. Although some salaried employees qualify for overtime pay, most are compensated at the same rate—regardless of time spent in the office. This means you could be burning the midnight oil for the same wage, whether you work 40 or 60 hours per week.
  • Higher stakes. While an hourly employee may fill a temporary need, a salaried employee is expected to meet long-term goals. As a result, your work performance will be graded on a different scale. Higher stakes could affect your ability to keep a job, earn a promotion or even secure a raise.

The Bottom Line

Securing a lucrative job means choosing the best payment structure for your family. Examine the pros and cons carefully to determine the best fit.

Posted in Finance
Learn how it works

Questions about credit repair?

Chat with an expert: 1-800-255-0263

Facebook Twitter LinkedIn