Worked example: salary office job
The default scenario uses an $85,000 salary, 40 paid hours per week, 50 work weeks per year, 5 unpaid extra hours per week, 45 commute minutes per day, 5 commute days per week, $300 monthly work costs, and a 0% entered tax rate.
Paid hours are 40 x 50 = 2,000 hours/year, so headline hourly pay is $85,000 / 2,000 = $42.50/hour.
Unpaid work time is 5 x 50 = 250 hours/year. Commute time is 45 / 60 x 5 x 50 = 187.5 hours/year. Total time is 2,000 + 250 + 187.5 = 2,437.5 hours/year.
Annual work costs are $300 x 12 = $3,600. With 0% entered tax, kept pay after work costs is $85,000 - $3,600 = $81,400.
Real hourly wage is $81,400 / 2,437.5 = $33.39/hour. That is 21.4% below the headline hourly rate before taxes and other personal costs.
How to calculate real hourly wage from salary
Start with headline hourly pay, then divide kept pay by all job-tied time. That includes scheduled hours, unpaid work spillover, commute time, and recurring job costs.
True hourly pay formula with commute and unpaid time
Real hourly wage = (salary - entered tax - annual work costs) / (paid work hours + unpaid work hours + commute hours).
How much does commuting reduce my hourly wage?
Commute time lowers true hourly pay because it adds job-tied time without adding pay. The effect is strongest when commute days are high or salary is modest.
What work costs should I include?
Include recurring costs that exist because of the job: parking, transit, meals, uniforms, tools, professional subscriptions, office contributions, and work-related childcare timing.
Salary vs hourly: why headline pay can mislead
Two jobs with the same salary can have very different true hourly pay when one has more unpaid time, commute burden, or required out-of-pocket costs.
How to compare a remote job and an office job
Run the same salary twice: once with commute and office costs, and once with remote costs. The difference is the hourly value of flexibility and location.
What this calculator excludes: legal overtime, benefits, and tax filing
The result excludes overtime eligibility, benefits valuation, tax filing rules, wage-law compliance, job security, career upside, and non-cash quality-of-life factors.
