Benefits and Drawbacks of Salaried vs. Hourly Positions

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At some point in your career, you may have to decide between taking a salaried position or an hourly one. In a salaried job, you are paid a fixed amount no matter how many hours you work. As an hourly employee, you receive a fixed rate for each hour you spend on the job. Each kind of job has benefits and drawbacks.

Hourly positions, referred to as “non-exempt” positions for labor law purposes, come with a number of benefits. The most significant advantage is that if an employer asks you to work more than 40 hours per week, they must pay you overtime for those extra hours. Employers also sometimes provide additional benefits, like extra pay for work on holidays. On the other hand, hourly positions often have less responsibility, lower overall pay, fewer benefits, and variable hours and paychecks. They also tend to be lower in the hierarchy of a company and tend to be among the first positions cut if business takes a downturn.

Salaried or “exempt” positions have benefits of their own, often starting with increased prestige and responsibility at work. Moving from hourly to salaried may be seen as a step up the career ladder. It may also come with more interesting tasks and benefits such as a retirement plan and health insurance. On the other hand, a salaried position can often come with the expectation, unspoken or otherwise, that you’ll work more than 40 hours a week when necessary. If you need to stay late to finish a project, your boss will expect you to, and you won’t receive extra compensation for that time.

When deciding between a salaried and an hourly position, it’s important to evaluate the specifics of your situation. If a salaried job comes with significantly more benefits or higher earning potential, it may be worth it to spend more hours at work now and then. However, if a salaried job offers few perks and the expectation of twice as many hours on the job, it may not be a good idea.

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