This equation computes an estimated hourly wage required to achieve an equivalent compensation to a present salaried employment.

This equation uses a full year work period (so 52 weeks at 40 hours per week) to calculate a commensurate hourly rate.

Inputs

• sal - Annual salary (this is pre-tax gross compensation)
• med - monthly premium paid by employer for a medical insurance (this is the employer portion of the monthly premium, not the amount deducted from the employee paycheck)
• dent - monthly premium paid by employer for a dental insurance (this is the employer portion of the monthly premium, not the amount deducted from the employee paycheck)
• other - total monthly premium paid by an employer for any other benefits (such as life insurance, disability insurance, etc.)

Usage

This equation allows a user to make a quick estimate of the hourly compensation required to equal a salaried compensation.  This uses the pre-tax gross salary and so does not represent take home pay.  Thus the hourly rate also includes the taxable portion of income.

Example 1 (ignoring benefits) : The employee has a present salary of $62,500.  They have no benefits information and so want to make a very quick gross estimate that will consider only their salary.  They input 62500 for the sal input and input zeroes for the remaining inputs.  The equation reports that their original salary is equivalent to an hourly rate of approximately $30.05/hour.

Example 2 (estimating 50% benefits) : The employee has a present salary of $65,885.  They have no benefits information but want to make a simple estimate assuming their employer pays half of the medical/dental premiums and half the other benefits.  This means, in other words, that they will assume their annual compensation package includes benefit amounts equal to what they have had withheld each paycheck.

They input 65885 for the sal input.  Their medical withholding from their paycheck has been $178 per month, so they assume the same amount for the med input, again assuming their employer has compensated them 50% of the total premium.  They have $49 deducted each month for a dental insurance premium, so enter an equivalent 49 for the dent input , representing the employer portion of dental premium compensation. The total of other benefits deducted each month has been an additional $78, and so they enter 78 for the other input. The equation reports that their original salary is equivalent to an hourly rate of approximately $33.44/hour.

Example 3 (full benefits compensation) : The employee presently makes a salary of $47,005.  They decided to see what hourly rate would be equivalent to that salary plus pay for all the insurance they presently purchase with a monthly premium.  Their whole cost of premiums is $477 for medical and $55 for dental.  They choose to ignore other benefits.

They input 47005 for the sal input, 477 for the med input ad 55 for the dent input.  they enter zero for the other input.  This equation tells them that an equivalent total compensation can be achieved with approximately an hourly contracted rate of $25.67