The table below shows the typical hours worked by employees at a company. A salaried employee makes $60,000 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 (1)
Calculate the total hours worked per week: 46 hours.
Calculate the weekly salary: 52 60000 ≈ $1153.85 .
Calculate the weekly hourly pay: ( 40 × 20 ) + ( 6 × 30 ) = $980 .
Salaried employees make more per week: C .
Explanation
Calculate total hours worked First, let's calculate the total hours worked per week by the hourly employee. From the table, the total hours are 0 + 8 + 8 + 9 + 9.5 + 7.5 + 4 = 46 hours.
Calculate weekly salary Next, we calculate the weekly earnings of the salaried employee. The annual salary is $60 , 000 , so the weekly salary is 52 60000 ≈ $1153.85 .
Calculate weekly hourly pay Now, we calculate the weekly earnings of the hourly employee. The employee works 46 hours per week, so they have 46 − 40 = 6 overtime hours. The regular pay is 40 × $20 = $800 , and the overtime pay is 6 × $30 = $180 . Therefore, the total weekly earnings for the hourly employee are $800 + $180 = $980 .
Compare weekly earnings Comparing the weekly earnings, we see that the salaried employee makes approximately $1153.85 per week, while the hourly employee makes $980 per week. Therefore, the salaried employee makes more per week than the hourly employee.
Conclusion Based on the comparison, the salaried pay option is better for the employee. So the answer is C.
Examples
Understanding the difference between hourly and salaried pay is crucial for financial planning. For instance, if you're deciding between a job that pays a fixed annual salary and one that pays an hourly wage, consider the number of hours you'll likely work each week. If you anticipate working many overtime hours, the hourly job might be more lucrative. Conversely, if you prefer a stable income and fewer hours, the salaried position could be better. This analysis helps you make informed decisions about your compensation and budget effectively.
