How the calculation works
(annual gross pay − annual work costs) ÷ annual committed hours
- annual committed hours
- paid hours + unpaid extra hours + commute hours (hours/year)
- annual work costs
- direct costs caused by the role (currency/year)
All money inputs must use one currency. The calculator does not convert currencies or estimate tax.
Nominal hourly wage uses annual gross pay divided by paid hours only. Effective hourly wage expands the denominator to all committed time. The cost-adjusted result also removes direct annual work costs from the numerator.
Worked example: salary, unpaid time, commuting and direct costs
The displayed outputs below are generated from the same shared-work-logic engine used by the calculator.
Assume annual gross pay of 100,000 currency units, 38 contracted hours and 5 unpaid extra hours each week, 46 weeks worked, a 60-minute daily round-trip commute over 5 days, and 5,000 currency units of annual work costs.
| Measure | Result | Interpretation |
|---|---|---|
| Annual paid hours | 1,748 hours | Contracted paid time across the entered working weeks. |
| Annual committed hours | 2,208 hours | Paid time, unpaid extra work and commuting. |
| Annual unpaid extra hours | 230 hours | Entered unpaid extra hours multiplied by weeks worked. |
| Annual commute hours | 230 hours | Daily round-trip commute multiplied by workdays and weeks worked. |
| Nominal hourly wage | 57.21 currency units/hour | Gross pay divided by paid hours. |
| Effective hourly wage | 45.29 currency units/hour | Gross pay divided by all committed hours. |
| Cost-adjusted effective hourly wage | 43.03 currency units/hour | Gross pay less direct costs, divided by committed hours. |
What to include—and what to keep separate
- Include routine paid and unpaid job time, plus the full round-trip commute.
- Include direct costs that would disappear if you did not take the role.
- Keep taxes, statutory deductions and benefits separate unless a local tool models them with current evidence.
- Compare non-numeric factors separately: flexibility, job security, health, development and personal preference.
Sources and method boundary
- ILOSTAT: wages and working-time concepts and definitions — International Labour Organization (accessed 2026-07-27): Defines hours actually worked, hours paid for, unpaid overtime and the statistical treatment of commuting.
- Resolution concerning the measurement of working time — International Labour Organization (accessed 2026-07-27): Primary international statistical standard used to explain why Wage101 uses a broader personal committed-time boundary.
- Wage101 Effective Hourly Wage methodology — Wage101 (accessed 2026-07-27): Canonical formula, units, rounding and limitations for the engine.