Since I started working, I was always salaried (or had a grant). Now that I decided to completely change my life (and if you’re in that transition period, check out this awesome book), this old question popped up and I found myself thinking about it. As I said before, I was offered a part-time research position (in the form of a grant), which I took. This is the most unscientific graph of history, which shows that I will devote as much time to this blog as I do to my new job:
As I define the number of hours I work every week, it is somewhat comparable to being an hourly employee. I decided to address this “Salary vs hourly” question in a broader context, using my own situation as a reference. Let us first go through the pros and cons associated with this question.
I have been a salaried employee my entire professional life, so I know this position very well.
- There are usually way more benefits in salaried positions, such as unemployment benefits, sick leaves and what not. On top of that, as you develop a relationship with your employer, you are also allowed to take some time off, work from home and leave earlier. In Germany, it is common that most employees leave earlier on Fridays too. In Portugal, working from home is becoming more and more of a trend.
- Vacation and bonuses. While in Europe it has been more and more common to structure each employee’s salary such that bonuses are included, in the US most employees who receive bonuses are those working in sales or are managers. In most cases, bonuses programs are based on the performance of each employee, which means that higher productivity may translate into a higher salary in this case.
- Stability. I know that most salary positions among my friends tend to be way longer than hourly positions. This is one of the most important questions of the salary vs hourly debate, in my opinion.
- For most positions, the hourly rate you end up getting earning may not be that attractive. Especially if you end up working more than the default 160 monthly hours. In my own case, I ended up doing that and I actually figured that I worked upwards to 220 hours, which meant that my salary came out at $10 per hour.
- The flexibility that you have sometimes is compensated by not really knowing when you are done for the day. Usually, your tasks are part of monthly or yearly goals, so if deadlines come about, you may end up leaving way later. I feel that this is way more common in Portugal and Canada than Germany, where people tend to follow more standard working schedules.
Some of my previous co-workers were hourly workers, and I’ve got to talk to them often about this topic, and so I think that I know what are the main pros and cons of this position. At the same time, I must say that this is way more common in the US and Canada than in Europe (both Portugal and Germany).
- Set hours. Maybe you’re like me and like to define your entire schedule for the day. It helps greatly to have set hours.
- Overtime paid really well. You may end up earning 2.5x your hourly rate. If you are requested a lot, and you are willing to work your but off, it may be a great way to save some big bucks.
- Increased earnings potential. If you work by the hour, chances are that you can work more time and optimize your working schedule. I actually think of hourly as you being your own boss and renting your time out. You can choose the companies that pay you well.
- Thorough, stressful documentation of your working time. If you spend 5 minutes more at lunch time or leaving a few minutes after 5pm, it won’t go unnoticed. If you are looking for a not-so-stressful position, this salary vs hourly debate should become much simpler because of this.
- Lack of career progression. While this is not a universal true, it is usually the salaried employees that get the most important positions.
- Lack of status and creditworthiness before a bank. At least in the environments I know, banks tend to lend you money more easily if you have a salary.
If you are given the option to decide between salary vs hourly, consider the pros and cons for both positions. You’re the best person to decide what fits you the better. Either way, chase your dreams.
Other sources on this subject: