Payment is a part of every job seeker’s decision of whether or not to accept a job. Just as you have to consider the responsibilities of the job and the organizational culture, you must also consider the way you will be paid before accepting any position.
There are generally two options when it comes to payment: salary and hourly. Employees on a salary basis are paid a set amount every month, while hourly employees are paid for the exact amount of time they work.
Each one has its benefits and disadvantages To determine which form of payment is best for you, consider the following
Benefits of hourly pay
The employees who work hourly are paid for the time they work, with no exceptions. If your company wants you to work more time, they have to pay extra for it. The overtime rate is currently set at a time and a half your normal hourly rate, but many companies pay double-time if the employees are working on holidays.
It’s not guaranteed, so if you choose an hourly position, make sure it’s part of your contract to sign the job. If you’re in a well- repayment field with frequent overtime, you could make more than if you earned the same official pay on a salaried basis.
Hourly employees are also frequently able to achieve better work-life balance than salaried employees. They normally do not take their work at home with them because they won’t be paid once they leave their job site.
- Overtime payment.
Most businesses use a time tracking system that pays employees by the minute, so, if you receive hourly pay, you should be paid if you need to stay at work late. Since federal law requires overtime for hourly employees, you could make some more payments per week if your job needs you for more than 40 hours a week during a busy time.
- Ability to dedicate time to other interests.
Having an hourly position allows you to schedule other interests like improving skills, going to college, starting your own organization, or working another full or part-time job.
Disadvantages of hourly pay
Being paid hourly can make your job or income more at risk. If a company goes through hard times, your hours may be cut and your salary is not guaranteed. Hourly positions usually feel the impact of an economic downtown in their industry first. Many businesses choose to reduce the hours for hourly employees instead of cutting off salaried employees.
For example, if an employee is getting hourly pay who usually works 40 hours per week could lose up to 25% of their normal payment if their employer decides to schedule them for 30 hours between the weeks that aren’t busy.
The Affordable Care Act employers with 50 or more employees are only required to provide health insurance to employees who work 30 or more hours a week. Some companies may cut employee hours to fewer than 30 per week to avoid paying for insurance.
Benefits of salaried pay
A salaried employee is paid regularly and at the same rate at each pay period according to their contract. In salaried pay, you work 40 or 30 hours or if your company is closed for the holidays, you will be paid. Salaried employees are also more likely to receive benefits, including health care, after retirement contributions, and paid vacation time.
- Consistent paycheck.
Salaried employees get a certain amount from their employers regularly, even if there’s a holiday. You can also use sick days if needed without having your pay reduced. A steady income can reduce stress and allows for more flexibility when you have unexpected expenses.
- More benefits.
Full-time, salaried employees get additional employment benefits such as health care, insurance, and paid vacation time. Even if a salaried pay job with benefits pays less than an hourly job, it could put you in a better financial position. Perks such as maternity or paternity leave, or free childcare can provide significant savings.
- More career advancement opportunities.
Normally a salaried position comes with more responsibilities than an hourly job. Even if you accept a payment cut off to move from an hourly to a salaried role, it could be worth it in the long term.
Disadvantages of salaried pay
While hourly employees are frequently limited in the amount of time they work each week, salaried employees normally work after hours or extra hours during the day regardless of how many hours they have worked that week already. There is no additional payment for more work.
Conclusion
Each form of payment comes with its benefits and disadvantages, but you may find that which one works better for you. It’s important to consider your job field and the type of work you’ll be doing before deciding whether salary or hourly pay will provide the fairest payment for your efforts. In addition, hourly employees don’t generally enjoy the same flexible hours as salaried employees.
While a salaried employee will have some flexible schedule that normally allows for sick days and paid time off, an hourly employee must arrive and clock in on time to start their shift.
The Affordable care act requires companies with 50 or more employees to help pay for health insurance for those who work 30 or more hours per week. Some companies have chosen to avoid these responsibilities by keeping each hourly employee from working more than 29 hours per week. If your boss decides to reduce your hours permanently, you could have to find a second job or a new position.
