2.1 Wages, hourly rates, overtime & making change
Key Takeaways
- Gross pay for straight time is the hourly rate multiplied by hours worked, before any deductions.
- Overtime is paid at time-and-a-half (1.5x the rate) for every hour over 40 in a single week.
- Split an overtime week into 40 regular hours plus the extra hours before multiplying to avoid errors.
- Multiply weekly pay by 52 for annual pay, or divide an annual salary by 12 for monthly pay.
- Change due equals the amount tendered minus the total purchase; count up from the price to check it.
Getting Paid for the Hours You Work
On the WorkKeys Applied Math test, some of the most common questions ask you to figure out how much a worker earns. These "gross pay" problems (gross pay is the amount before taxes and deductions) reward careful, step-by-step arithmetic. Always read for three things: the hourly rate, the number of hours, and whether any overtime rules apply.
Straight-Time Pay
Straight time is simply the rate multiplied by the hours worked:
Gross pay = hourly rate x hours worked
Example. A warehouse associate earns $14.50 per hour and works 38 hours in a week.
$14.50 x 38 = $551.00
The worker's gross pay is $551.00. Notice the hours are under 40, so no overtime applies.
Overtime: Time-and-a-Half
Under federal rules, most hourly employees earn overtime for every hour over 40 in a single week. Overtime is paid at "time-and-a-half," which means 1.5 times the normal rate. The reliable method is to split the week into two buckets:
- Regular hours - the first 40 hours at the normal rate.
- Overtime hours - everything past 40 at 1.5 x the rate.
Example. A machinist earns $18.00 per hour and works 46 hours this week.
- Regular pay: 40 x $18.00 = $720.00
- Overtime hours: 46 - 40 = 6
- Overtime rate: $18.00 x 1.5 = $27.00
- Overtime pay: 6 x $27.00 = $162.00
- Total: $720.00 + $162.00 = $882.00
A common mistake is to pay all 46 hours at the regular rate ($828.00) or to forget to subtract 40 before multiplying. Splitting the hours first prevents both errors.
Weekly and Annual Pay
Once you can find weekly pay, extending to longer periods is just more multiplication.
- Biweekly (every two weeks) = weekly pay x 2
- Monthly (from an annual salary) = annual pay divided by 12
- Annual (from weekly pay) = weekly pay x 52, because there are 52 weeks in a year
Example. A technician grosses $640 per week and works all year. Annual pay is $640 x 52 = $33,280 per year.
Example. An office assistant is offered an annual salary of $39,000. The monthly gross pay is $39,000 divided by 12 = $3,250 per month.
Example. A worker paid $640 per week wants to know the biweekly paycheck. Biweekly means every two weeks, so multiply by 2: $640 x 2 = $1,280 every two weeks. Watch the wording carefully - "biweekly" (every two weeks) is not the same as "twice a month," which would divide the year into 24 pay periods instead of 26.
To turn a salary into an approximate hourly rate, divide the annual figure by 2,080 - the number of work hours in a standard year (40 hours x 52 weeks). So $39,000 divided by 2,080 is about $18.75 per hour. This lets you compare a salaried offer against an hourly job on equal footing.
Making Change
Cashier and counter jobs often require you to make change - the money handed back when a customer pays with more than the exact amount.
Change = amount tendered - total purchase
Example. A customer's order comes to $13.42 and they hand over a $20 bill.
$20.00 - $13.42 = $6.58
The change due is $6.58. To count it back efficiently, work up from the price to the amount paid: 8 cents brings $13.42 to $13.50, another 50 cents brings it to $14.00, then one dollar reaches $15.00, and a five-dollar bill reaches $20.00 - a quick check that the total returned is $6.58.
Example. A part costs $7.85 and the customer pays with a $10 bill and a nickel ($10.05). Add the tender first: $10.00 + $0.05 = $10.05. Then subtract: $10.05 - $7.85 = $2.20. Customers sometimes hand over extra coins so the change comes out in round amounts, so always total the money received before subtracting the price.
A Quick Reference Table
| Situation | Formula | Worked example |
|---|---|---|
| Straight time | rate x hours | $14.50 x 38 = $551.00 |
| Overtime hours | hours worked - 40 | 46 - 40 = 6 |
| Overtime rate | rate x 1.5 | $18.00 x 1.5 = $27.00 |
| Annual from weekly | weekly x 52 | $640 x 52 = $33,280 |
| Monthly from annual | annual / 12 | $39,000 / 12 = $3,250 |
| Change due | tendered - total | $20.00 - $13.42 = $6.58 |
Putting It Together
Some questions combine several steps. Suppose a worker earns $16.00 per hour, works 44 hours, and you must find annual pay assuming every week looks the same.
- Regular pay: 40 x $16.00 = $640.00
- Overtime pay: 4 x ($16.00 x 1.5) = 4 x $24.00 = $96.00
- Weekly total: $640.00 + $96.00 = $736.00
- Annual total: $736.00 x 52 = $38,272.00
Read carefully, keep the dollars and cents lined up, and always ask whether the hours cross the 40-hour overtime line before you multiply. That single check protects the largest share of the points in this part of the test, because the difference between straight time and time-and-a-half can swing an answer by a hundred dollars or more.
A machinist earns $18.00 per hour and works 46 hours in one week. Hours over 40 are paid at time-and-a-half. What is the week's gross pay?
A technician grosses $640 each week and works all 52 weeks of the year. What is the annual gross pay?
A customer's order totals $13.42 and they pay with a $20 bill. How much change is due?