The table below shows the typical hours worked by employees at a company. A salaried employee makes $50,000 per year. Hourly employees get paid $20 per hour but get $30 per hour for each hour over 40 hours.
| Sun. | Mon. | Tues. | Wed. | Thurs. | Fri. | Sat. |
|---|---|---|---|---|---|---|
| 0 | 8 | 8 | 9 | 9.5 | 7.5 | 4 |
Which of the payment options would you recommend to a new employee?
a. Either one. Hourly and salaried employees earn the same amount per week.
b. Hourly pay. Hourly employees make more per week than salaried employees.
c. Salaried pay. Salaried employees make more per week than hourly employees.
d. There is not enough information given to compare weekly earnings.
Answer (2)
Calculate the total hours worked per week: 0 + 8 + 8 + 9 + 9.5 + 7.5 + 4 = 46 hours.
Calculate the weekly earnings for the hourly employee: ( 40 × $20 ) + ( 6 × $30 ) = $800 + $180 = $980 .
Calculate the weekly earnings for the salaried employee: 52 $50 , 000 ≈ $961.54 .
Compare the weekly earnings and determine that the hourly employee makes more per week. Therefore, the answer is Hourly pay. Hourly employees make more per week than salaried employees.
Explanation
Calculate Total Hours First, we need to determine the total hours worked by the hourly employee in a week. From the table, the hours worked are 0 (Sunday) + 8 (Monday) + 8 (Tuesday) + 9 (Wednesday) + 9.5 (Thursday) + 7.5 (Friday) + 4 (Saturday).
Total Weekly Hours Adding these hours together, we get: 0 + 8 + 8 + 9 + 9.5 + 7.5 + 4 = 46 So, the hourly employee works 46 hours per week.
Calculate Hourly Employee's Weekly Pay Next, we calculate the weekly earnings of the hourly employee. The employee earns $20 per hour for the first 40 hours and $30 per hour for each hour over 40. Since the employee works 46 hours, they have 6 hours of overtime. Regular pay: 40 hours × $20/ hour = $800 Overtime pay: 6 hours × $30/ hour = $180 Total weekly pay: $800 + $180 = $980
Calculate Salaried Employee's Weekly Pay Now, we calculate the weekly earnings of the salaried employee. The salaried employee makes $50 , 000 per year. To find the weekly earnings, we divide the annual salary by the number of weeks in a year (52): 52 $50 , 000 ≈ $961.54 So, the salaried employee makes approximately $961.54 per week.
Compare Weekly Earnings Comparing the weekly earnings, the hourly employee makes $980 per week, while the salaried employee makes approximately $961.54 per week. Therefore, the hourly employee makes more per week than the salaried employee.
Conclusion Based on our calculations, the hourly employee earns $980 per week, and the salaried employee earns approximately $961.54 per week. Therefore, the hourly pay option is better for the new employee.
Examples
Understanding the difference between hourly and salaried pay is crucial for making informed career decisions. For instance, if you're considering a job that offers either a fixed annual salary or an hourly wage with potential overtime, calculating your potential weekly earnings under both scenarios helps you determine which option provides better financial stability and growth. This analysis is particularly useful in industries with fluctuating work hours, such as retail, hospitality, or consulting, where overtime can significantly impact your income. By comparing the projected earnings, you can make a well-informed decision that aligns with your financial goals and work-life balance preferences. For example, knowing that you could earn more with overtime as an hourly employee might influence your decision to take that job over a salaried position with fixed pay.
The hourly employee works a total of 46 hours per week, earning $980, while the salaried employee earns approximately $961.54 per week. Thus, hourly pay is the better option. The recommended choice is b. Hourly pay. Hourly employees make more per week than salaried employees.
;
