Salary to Hourly: The Arithmetic and the Part Everyone Skips
How to convert a salary to an hourly rate, why 2,080 hours is both the standard and slightly wrong, and what your paid leave is actually worth per hour.
The sum takes four seconds. Divide the salary by 2,080 and you have an hourly rate. Seventy-five thousand becomes $36.06. Done.
People still get this wrong, and not because they can’t divide. They get it wrong because 2,080 is a convention rather than a measurement, and because the number that division gives you is usually not the number they needed.
Where 2,080 came from
Forty hours a week, fifty-two weeks. Nobody measured anything.
A calendar year is 52.18 weeks long, so a 40-hour schedule actually spans about 2,087 hours. The US Office of Personnel Management has used 2,087 for federal pay conversions since 1985 for exactly that reason. Everyone else uses 2,080, because it divides cleanly into fortnights and because payroll software was written in the 1970s. On a $75,000 salary the two conventions differ by roughly $250 a year. Fine for a government with two million employees. Noise for you.
The number almost nobody computes
This is the useful one.
Say you’re salaried at $75,000, you get 10 public holidays, and you take 15 vacation days. That’s a fairly ordinary American package. Across a 260-day working year, 25 days disappear.
You are paid for 2,080 hours. You are present for 1,880.
$75,000 over 1,880 hours is $39.89 an hour.
The $3.83 gap is the cash value of your leave, about 11% on top of the headline rate, and it evaporates the day you go freelance. So when a recruiter asks what you’re on per hour and you answer $36.06, you have quoted a rate that assumes you never take a day off and never get sick. I did this for two years. It’s an expensive habit.
Bi-weekly is not semi-monthly
Two words that sound interchangeable and aren’t:
- Bi-weekly means every two weeks. Twenty-six payments a year.
- Semi-monthly means twice a month. Twenty-four payments, usually the 15th and the last day.
The annual total is identical. The cheques are not: bi-weekly ones run about 8% smaller, and two months a year carry three of them. Every January a handful of people on bi-weekly schedules budget for two payments, meet the three-payment month, and email payroll to report the error.
If your employer switched you from one to the other and your take-home looked wrong, this is almost always why.
Pricing a contract rate off a salary
The trap is to start at $36.06, round up to $40 because freelancing feels like it should pay more, and call that a raise. It isn’t one. It’s a 10% pay cut dressed up as independence.
What the salary was quietly covering: paid leave, sick days, the employer half of payroll tax, health cover, a laptop, software licences, the hours spent on invoices and proposals that nobody pays for, and the three weeks between contracts. The usual rule of thumb is to multiply the salaried hourly rate by 1.5 to 2. For our $36.06, that’s somewhere between $54 and $72.
That number looks absurd until you count a month of unbilled hours. Then it looks about right.
Plug your own figures into the Salary to Hourly Calculator and read the adjusted column rather than the headline one. It’s the honest version.