Why $30 an hour is not $62,400
The quick conversion everybody uses is hourly × 2,080 (40 hours × 52 weeks). It is fine for salaried employees with paid leave. It is badly wrong for contractors, hourly staff and anyone with unpaid time off, because it silently assumes you are paid for all 52 weeks.
Take ten unpaid public holidays and ten unpaid vacation days and you are paid for 48 weeks, not 52. That $62,400 becomes about $57,600 — a difference of nearly $5,000 that never appears in the job posting.
Converting in both directions
Note that monthly pay is the annual figure divided by twelve, not four times the weekly figure. There are about 4.33 weeks in an average month, which is why "four weeks' pay" and "a month's pay" are different numbers — a gap that catches people out when budgeting.
From gross to what actually lands in your account
Every figure on this page is gross pay. The amount that reaches your bank account is meaningfully smaller, and the gap surprises people changing country, changing job, or seeing their first payslip.
What comes out, roughly in the order it is deducted:
- Income tax. Nearly always progressive, meaning a pay rise is taxed at your marginal rate, not your average one. Moving into a higher band never reduces your take-home pay — only the income above the threshold is taxed more.
- Social contributions. Social Security and Medicare in the US, National Insurance in the UK, and their equivalents elsewhere.
- Pension or retirement contributions, often before tax, which is why they cost less in take-home terms than their headline figure.
- Health insurance and benefits, commonly pre-tax in the US.
As a very rough planning figure, take-home tends to land around 65–80% of gross for a typical full-time employee, depending heavily on country, state and personal circumstances. Use your own payslip rather than a rule of thumb for anything that matters.
When negotiating, negotiate total compensation, not salary. Pension matching, bonus, equity, holiday allowance and remote flexibility are all real money, and they are frequently easier for an employer to move than base pay.
Knowing what you are worth
The conversions on this page tell you what an offer is. Whether it is good is a separate question, and it is answered with market data rather than arithmetic.
- Check several sources. Public salary databases, industry surveys, recruiter conversations and job postings with published bands each carry different biases. Triangulate rather than trusting one.
- Location still matters, even remotely. Many employers band pay by region. Know which band applies before negotiating.
- Compare total compensation. Base, bonus, equity, pension matching, holiday allowance and health cover can differ by tens of thousands between two offers with identical base salaries.
- Internal raises lag the market. Annual increases typically track inflation while market rates move faster, which is why changing employer has historically produced larger jumps than staying.
Two offers that are not equal
Offer A: $95,000 base, no bonus, 3% pension match, 15 days holiday. Offer B: $88,000 base, 10% target bonus, 6% match, 25 days holiday. B is worth roughly $88,000 + $8,800 + $5,280 = $102,080 in cash terms, plus two extra weeks of your life — despite the lower headline.
When you do negotiate, name a number based on evidence rather than a percentage above your current pay. Anchoring on your old salary carries any past underpayment forward.
Comparing a contract rate to a salary
An hourly contract rate is not comparable to a salary until you adjust for what the salary quietly includes. Before deciding a $75/hour contract beats a $130,000 salary, subtract the value of:
- Paid holidays and vacation — often 15–30 days.
- Employer pension or 401(k) matching — commonly 3–6% of salary.
- Health insurance, which can be worth $6,000–$20,000 a year for a family in the US.
- Sick pay, parental leave, and the employer's half of payroll taxes if you are self-employed.
- Gaps between contracts — a 90% utilisation rate cuts the annual figure by a tenth.
A rough rule used by contractors is to target 25–35% above the equivalent salaried rate to break even on total compensation.