In general, a fixed hourly rate of pay means that you receive a set wage for each hour you work. The word "fixed" also means that your pay does not normally allow for incentives, commissions or tips. This has different applications in a typical employment setting as compared to a self-employment role.
Standard Wage Jobs
When you apply for a job, you are normally told how much you will make in the form of an annual salary or hourly wage, along with the details on any types of bonuses or incentives. Though not inherent, a fixed hourly wage is often associated with an unskilled or semi-skilled job where turnover is high or work is more temporary. A gas station attendant would likely get a wage, such as $9 per hour, for instance, while a marketing coordinator might make a salary of $50,000 per year.
Breaking Down Pay
To more effectively compare the income of two jobs, you need a common form of measurement. You can break down an annual salary into an hourly rate if necessary. A person making $40,000 annually would divide this amount by 52 weeks, and then by 40 hours per week, which translates to an hourly rate of $19.23. This factors in paid time for vacations, sick days and holidays. It also assumes a typical 40 hours a week and doesn't factor in extra time off-the-clock, which is common in some salaried positions.
The expressed "fixed hourly rate" is often used in relationship to self-employment or contracted work. If you are a consultant, for instance, you might quote a client with a fixed hourly rate of $35. This is an alternative to project-based pay where you charge a set amount for an entire project. The advantage of billing by hour is you don't end up investing way more time than expected on a job.
An advantage of a fixed hourly pay rate is that you legally must be paid for each hour on the clock. Salaried workers often have to work beyond a standard 40-hour week with no extra pay. If you do work over 40 hours, you typically must receive overtime pay at an advanced rate, based on state and federal guidelines. Some employers pay an hourly wage plus opportunities for commissions, bonuses and tips.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.