The 2,080 shortcut and where it breaks
Forty hours a week for fifty-two weeks is 2,080 hours. Multiply by your hourly rate for annual pay. The shortcut breaks whenever your reality differs: unpaid leave, seasonal work, variable hours, or regular overtime all shift the number materially.
Unpaid time is a real pay cut
A salaried worker with three weeks of paid leave earns the same whether they take it or not. An hourly worker taking the same three weeks unpaid loses about 5.8% of annual income. When comparing a salaried offer to an hourly one, convert both to an effective annual figure including the time off you actually intend to take.
Comparing an offer properly
- Employer retirement match — often 3–6% of salary, and effectively free.
- Health insurance — an employer contribution frequently worth $6,000–$20,000 a year for family cover.
- Paid leave and holidays — three weeks plus ten holidays is about 10% of the year.
- Payroll taxes — self-employed contractors pay both halves of FICA, an extra 7.65%.
The contractor multiplier
A contractor covering their own health insurance, retirement, unpaid time off and the employer half of payroll taxes typically needs 25–40% above the equivalent employee rate to reach the same real compensation. Quoting your salaried hourly rate as a contract rate is the most common freelance pricing mistake.
Sanity-check against the market
Before negotiating, convert every comparable figure to the same basis — annual, including benefits. Roles advertised hourly and roles advertised as salaries are frequently much closer, or much further apart, than the headline numbers suggest.