Often, employees jump at the opportunity to take on salaried positions rather than hourly-paid. And of course, there are many salary benefits that make these positions worthwhile. However, people don’t always recognize the potential drawbacks of accepting a salaried job. So, if you’re trying to choose whether to stay hourly or move to salary, know the pros and cons first. They just might help you avoid making the wrong choice for your needs and lifestyle.
Not All Salary Benefits Apply the Same Way
Now, before even diving into the different salary benefits and drawbacks, we need to establish one important fact. The pros and cons listed here won’t apply to every industry or position. In fact, some jobs may turn things on their heads, so that a common benefit instead accompanies hourly pay, and vice versa.
The point is, you should recognize the pros and cons of salary. But what’s vastly more important is assessing each job individually. Because otherwise, you could take a position thinking it entails one thing when, in fact, it brings the opposite.
As a quick example, salary often provides greater flexibility for workers in laid-back industries. Especially where work tasks don’t pile up quickly. But for jobs with high demands that can stack up in a matter of minutes, you might end up with far less flexibility. It all depends on the nature of the job itself.
So, while understanding the salary benefits and drawbacks can help you make a much more informed decision, the best option is to assess the position. That said, let’s dive into a few of the most common pros and cons of salary and hourly pay structures.
Common Salary Benefits
1. Greater Flexibility
One of the primary reasons you might want to shift to a salaried position is because it can afford greater flexibility. Generally, this is because salaried jobs focus more on the results than the time it takes to achieve them. Accordingly, if you need to take off during the middle of the day for an appointment, you have that freedom. Alternatively, picking up young children from school or daycare becomes much simpler. So, you can fit your work around a schedule that makes the most sense for you.
However, you must be careful to manage your time well and ensure that you achieve results. Because abusing this salary benefit easily becomes grounds for disciplinary action. If you seem to take time out from your work more often than necessary or fall behind, your peers and managers will likely notice. So, with flex time, you have to have a great sense of responsibility and understand your work requirements.
2. Stable Pay and Budgeting
One inherent benefit of salaried positions is receiving stable pay from one check to the next. That way, you never have to wonder how much you’ll be making. In essence, you make the same amount of money, no matter the number of hours you work. That’s because salary is set on a yearly scale. So, if your pay is set to $50,000 per year, and you’re paid twice per month, you’ll make roughly $1,851 before taxes and deductibles.
The contrast for hourly wages is that you only make as much as you work. If your hourly rate is $13.50, and you work 40 hours per week, you’ll make roughly $1,080 before taxes and deductibles every two weeks. So, there’s a large amount of variability there. Overall, salary pay makes it possible to establish a much stronger budget, accounting for living expenses and other commitments. Because when money is the same from one check to the next, you know exactly what you’ll be working with.
3. Better Income
Generally speaking, without accounting for potential overtime pay, salaried positions make more than hourly. Because pay isn’t dependent upon the amount of hours you put in, it’s possible to get paid for time you aren’t actually working. For example, if the office is closed for bad weather, hourly workers miss out on a full day of their pay. But salary workers don’t have to worry over those kinds of issues. Additionally, they receive paid time off and holidays. So, there are multiple opportunities to make money where hourly workers can’t.
Even if you break down salary to an hourly rate, it often comes out higher than what other workers make. Especially for days where your tasks are completed early and you leave before you normally would. All in all, salary workers typically make more than hourly employees for the amount of work they put in. So, if you’re looking for a position where you can work less and earn the same or more, salary might be a good fit.
4. Salary Focuses on Tasks
We already mentioned it above, but it’s important to recognize that salary work tends to focus more on tasks than time. In some instances, hourly workers might stretch themselves too thin, working on things that don’t matter just to get as much time in as possible. Particularly for companies who don’t regulate the amount of overtime available.
But when you know you’ll make the same amount regardless of the time it takes, you’re more likely to perform higher-quality work. So, even if salary workers put in less time, the results may be to a better standard.
Contrastingly, the goals of the worker and company may conflict with each other for hourly workers. For example, their objective is likely to make as much money as possible, and could lead to “riding the clock”. As a result, the company could end up wasting money for little return. But salary workers’ goals often line up more closely with those of the company. Because the amount of work they do doesn’t dictate how much they make.
5. Opportunity for Growth
Depending on the employer, salaried positions may provide better opportunity for growth, particularly in professional settings. Accounting for the wide spectrum of different career fields, salary is given most often to those in corporate or management positions. And as such, there exists more opportunity for professional development and training that can lead to better skills and pay. Most hourly positions, on the other hand, are far less likely to provide opportunities for real growth unless they require specialized knowledge. And even then, the training does more to advance a particular skill than the capabilities of the individual overall.
6. Salary Includes Other Benefits
Usually, salary benefits include more than simple pay. These might include important employee benefits such as:
- Employee health insurance
- Professional development opportunities
- Home office expense coverage
- Bonus pay
- Retirement plans
Of course, these are only a few of the possible benefits available through different employers. But salary workers are often more likely to receive these sorts of perks than hourly employees.
Cons of Salary Positions
1. Lack of Overtime Pay
One of the chief benefits of hourly work is that every hour over forty an employee works is eligible for overtime pay. Unless they’re considered exempt, salary workers don’t have that option. That means that if they work eighty hours in one week, they’ll make the same as if they had only worked forty.
This also means that some hourly workers have the option to earn extra pay whenever they need it. For example, if the company doesn’t regulate how much overtime a worker can get, they can make as much as they’re willing to give. Salary workers who need extra funding don’t have that option – they simply have to cut out certain expenses or find alternative methods for making money. So, creating and sticking to a strict budget might be necessary for salaried workers who don’t make quite as much as they might want or need.
2. Salaried Employees Could Work More
In contrast to the benefit of having greater flexibility, salaried workers might still end up working longer hours. That’s because the work is more focused on tasks than time. Hourly workers typically have a set schedule, say from 9 to 5. However, salaried workers might be required to stay at the office for extended periods in order to accomplish their tasks on time. Of course, this waxes and wanes. Some days might be long and others short. But that’s the point – flexible time also requires employees themselves to be flexible on how long they work.
So, if you’re looking for salaried work that allows you greater maneuverability, be aware that it comes with a potential price. Because you could end up working longer hours for no extra pay.
3. Greater Stress
Salaried workers are often those most responsible for the success or failure of different ventures. And as such, the level of stress accompanying these positions is often much higher than that of hourly workers. Particularly when the hours are long and deadlines come up faster than anticipated. As such, anyone looking for this sort of pay must be able to cope with the added stress and anxiety. Otherwise, they might find themselves unable to stay afloat.
4. Hourly Equivalent Might Fall Below Minimum
While salaried workers often end up making more money than hourly workers, the often can be true. For example, if a salaried worker consistently works sixty-hour weeks, the hourly equivalent might fall below minimum wage. So, when determining whether to accept a salaried job, you must understand the potential time requirements and determine whether the pay is actually worth your effort.
Learn More About Pay Structures and Salary Benefits
Understanding whether you should accept a salaried position can be a complex topic. And the benefits and drawbacks listed here don’t cover every aspect. Fortunately, we offer a Basics of Payroll course that further discusses compensation and benefits. So, if you’re still stuck trying to decide, be sure to check it out for more information.
Article written by Braden Norwood
Last updated June 26, 2023