WEBVTT

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- [Instructor] Let's say that
you just got two job offers,

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and these jobs are pretty
identical to each other,

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except for how they gave you the offer.

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So the first job, they tell
you that it is $30 an hour,

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and they're going to
expect you to be there

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40 hours per week.

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Then the second job, they're
offering you $60,000,

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$60,000 per year,

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and they're also assuming

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that you're going to be
there 40 hours a week.

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Which one is giving you better pay?

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Pause this video and see
if you can figure this out.

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What's better?

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$30 an hour or $60,000 a year?

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Alright, now let's work
through this together.

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Now, one way that many
people will often do this,

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and you might have just
tried to do it this way,

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but I'll tell you in a
second, is a mistake,

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is to say, okay, I'm going
to take my $30 per hour,

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multiply that times 40 hours per week,

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multiply that times four weeks in a month,

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and then multiply that
times 12 months in a year.

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Before I tell you why this is incorrect,

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let's actually calculate
what we get by doing that.

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If we take 30 times 40,
that's going to be 1200,

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times four weeks is going to be 4,800.

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And then if we want to
multiply 4,800 times 12,

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at the risk of me making
a simple math error

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while y'all are watching,
I will just do that here.

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4,800 times 12

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is equal to 57,600.

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Let me just confirm my math.

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So I took 30 times, lemme do it down here

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so you can see what I'm,
times 40 hours in a week,

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times four weeks, times
12 months in a year.

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I got $57,600.

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$57,600.

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So if you just did that
calculation, you might just say,

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oh wow, this job right
over here is better.

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$60,000 a year versus 57,600.

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But I just told you there is a mistake.

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Can you spot the mistake?

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Well, if you think about
what just happened,

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you didn't realize that most months

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actually have more than
four weeks in them.

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There's actually 52 weeks in a year,

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and the way we just calculated,

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we assumed there's 48 weeks in a year.

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So the correct way to do this

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would actually be to
take your $30 an hour,

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multiply it times 40 hours in a week,

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and then to get to the year,

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multiply that times 52 weeks in a year.

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And if we do that, we're going
to get a different number.

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So now, lemme do it up here.

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$30 an hour times 40 hours in a week

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times 52 weeks in a year

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gets us to $62,400.

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$62,400, which gives us
a very different number.

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This is almost $5,000 higher
than our previous number.

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And now all of a sudden it looks

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like the $30 an hour job is better.

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So the big takeaway from this video

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is if you're trying to convert
between hourly and annual,

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remember, don't just go for estimate

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how many weeks are in a month

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and then multiply you
by 12 months in a year.

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Or if you're going the other
way, divide by 12 months

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and then divide by four weeks.

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Think about multiplying
by 52 weeks in a year.

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Or if you're going from annual to hourly,

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think about dividing
by 52 weeks in a year.

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Now I know what some of y'all are saying.

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Well this might be roughly right.

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This $30 an hour looks better

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if I just take it all together like that.

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But maybe this job right
over here that isn't hourly

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is more salaried,

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and maybe they're going to
give me other vacations.

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I'm going to get national holidays.

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I can take sick leave.

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And that might indeed be the case.

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So what I just showed you

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is a very superficial quick calculation,

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which I wanna make sure that
you're going to do correctly,

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but you also have to think
about other differences

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that might exist in the job.

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This job, for example,
because of the vacations,

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might not actually make you work

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as many weeks as the calculation implies.