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7 Ways Hourly Pay Is Actually Better Than Salary (And 3 Ways It’s Worse)

A salary might offer more prestige, but hourly pay can be a smarter move.

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Updated July 18, 2024
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Most people think a salaried job is the best way to get ahead financially, as there are many clear perks — such as a reliable paycheck, a set schedule, and benefits. In addition, earning a salary comes with a certain level of prestige.

However, hourly pay can be a better choice for people at all stages of life. Here are some of the perks of hourly pay and why it might be a better choice for you.

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You might qualify for holiday pay at higher rates

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If you don’t mind working federal holidays, hourly work can help you build wealth. Hourly workers are entitled to holiday pay, which could be as much as double your normal rate.

Salaried workers don’t always get extra pay when they work a holiday, although they may get something like an extra day off.

You don’t run the risk of working for free

H_Ko/Adobe man in suit and tie

When you are paid by the hour, it means you are making money for every minute you are clocked in.

On the other hand, salaried workers sometimes find they are expected to put in extra hours to get a project done. Even if this only happens a few times a year, the extra time at work can really add up.

You might qualify for overtime

mavoimages/Adobe working late at night

Every company’s overtime policy is different — and unfortunately, some salaried workers find themselves working overtime without the compensation to show for it.

On the other hand, it’s illegal to ask hourly workers to do overtime without offering compensation. This could mean a whole lot of extra cash if your employer needs some extra hands on deck.

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Jobs that pay hourly typically have less responsibility

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While it’s not always the case, salaried jobs tend to come with a bit more responsibility. So, if you are just at work for a paycheck, hourly work may be a better move.

You are less likely to have to work from home after hours

Drazen/Adobe single mother with two kids

The rise of remote and hybrid jobs has had some not-so-welcome consequences for many salaried workers. It seems like now, these workers are expected to be available — and sometimes even working — during times they would normally be off the clock.

This isn’t the case for most hourly workers. Instead, they work when they are on the clock and generally aren’t expected to work from home.

It's easier to find part-time and flexible jobs with hourly pay

Daisy Daisy/Adobe senior woman working in a garden

If you’re not interested in a standard 40-hour workweek, hourly work might be the smarter choice. It’s easier to find part-time work with flexible hours if you are OK with forgoing some of the benefits that come with a salary.

What’s more, hourly employees often have more freedom to decide when they are available to work.

You will have more free time for other interests or side hustles

Drobot Dean/Adobe  girl reading book

Because hourly workers have more freedom to choose their own availability, they can block out time to devote to other interests or hobbies.

Hourly jobs often work great for those who are attending school, who have family obligations, or who simply want a better work/life balance.

The downsides of hour pay

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Of course, hourly pay isn’t perfect. Here are some of the disadvantages of earning hourly pay instead of a salary.

1. Your schedule will be less reliable

Production Perig/Adobe woman being late

One of the big perks of salaried jobs is that most have a regular schedule. These employees may have to work overtime every now and then, but they can normally count on their hours being something like the standard 9-to-5 every week.

Hourly workers don’t enjoy the same consistency, especially if they work somewhere that has busy and slow seasons, such as retail.

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2. You won’t get pay if you need a day off

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While some hourly employees get paid time off, most are only paid when they work. This means if you need a sick day or if you would like to schedule a vacation, you will have to plan around the lost income.

For some part-time workers, this is no big deal. But others may find themselves avoiding taking time off or calling in sick.

3. Employers may cap your hours

francescosgura/Adobe crossing off days on calendar

Employers sometimes cap the hours of workers for a variety of reasons. Large companies may limit your hours to 29, since the Affordable Care Act mandates that businesses with 50 or more employees must offer health insurance help for anyone working more than 30 hours a week.

Smaller companies may also cut back on shifts for hourly workers during slow seasons.

Is hourly pay better for you?

francescosgura/Adobe marking dates on a calendar board

Whether hourly pay is the right move for you depends on several factors, including:

  • How much you plan to work
  • What sort of flexibility you are looking for
  • Whether you are OK with forgoing the benefits afforded to salaried employees

For those looking to avoid the standard 40-hour workweek, an hourly job can be a smart financial move — especially if it’s for a company where you have the freedom to work as much or as little as you want.

Bottom line

adrian_ilie825/Adobe unrecognizable employee

With the rise of remote work, it’s also possible to earn extra income online by picking up a part-time gig.

The hourly rate for online jobs varies a great deal, but if you have some marketable skills — such as customer service experience, graphic design, writing, or editing — you could land some high-paying virtual work.


Author Details

Laura Gesualdi-Gilmore

Laura Gesualdi-Gilmore is a seasoned freelance writer who also teaches writing courses at Rutgers University. She's based in Jersey City and enjoys travel, live music and, of course, spending quality time with her pup.