Lesson 1: Income - Calculating Gross Pay Using Hourly Wage

   Constructing Knowledge

When you know the total hours worked in a pay period and you know the rate of pay (also known as the hourly pay), you can determine the gross pay by multiplying the rate of pay by the number of hours worked.

Gross Pay
Total amount of money earned for a paycheque before taxes or any other deductions are subtracted from a paycheque.

Advantages of Hourly Pay

  • If you work more hours in a day or week than what current labor standards allow, you may be compensated with days off in lieu or you may be paid for your extra hours at an overtime rate of pay.
  • Income is predictable if you work consistent hours.
Disadvantages of Hourly Pay

  • Hours worked may not be consistent, making your earned income inconsistent too.
  • Job security is lower than for jobs that pay a salary
  • Often, hourly employees are unable to access the same level of benefits as salaried employees

EXAMPLE 1

If a coal miner was paid $24.00 per hour, and worked 40 hours per week, how much would he earn in one week?

Solution


gross pay = rate of pay × hours worked
= $24.00/hour × 40 hours
= $960.00

The coal miner would earn $960.00 per week.

   Multimedia

A video describing gross pay calculation is provided.


EXAMPLE 2

Carol works at the Head-Smashed-in Buffalo Jump as an interpreter and earns $14.25 per hour. If she works 5 hours per day and 4 days per week, how much will she earn in one week?

Solution


Step 1: Determine the total number of hours worked in a week

5 hours per day × 4 days
= 20 hours per week

Step 2: Determine the gross pay

= $14.25/hour × 20 hours
= $285.00

Carol will earn $285 in one week.

   Points to Ponder

For example 2, you might have noticed that the expression $14.25/hour × 20 hours contains units of hours and dollars ($), but the result of $285 contains only the unit of dollars ($). What happened to the hours?

When making calculations with units, the units are also part of the calculation. Sometimes units will cancel each other out. This happens when you divide by a unit AND multiply by that unit on the same side of an equation.

= $14.25/hour × 20 hours

can be written as

\(\begin{align} &=\frac{\$14.25}{\color{red}{\text{hour}}}\times \frac{20\,\color{red}{\text{hours}}}{1} \\ \\ &=\frac{\$14.25}{\cancel{\text{hour}}}\times \frac{20\,\cancel{\text{hours}}}{1} \\ \\ &=\$285.00 \\ \end{align}\)

For the purpose of this course, you are only required to include units in your final answer.


Now, it is your turn! Complete the questions in your Chapter 1, Lesson 1 Practice Makes Perfect that refer to Hourly Pay.



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