How to Calculate Your Average Hourly Wage with Multiple Rates
Calculating your true hourly earnings can be tricky when you work at different pay rates throughout the week. Whether you are dealing with overtime shifts, earning shift differentials, or juggling multiple freelance gigs, a simple average calculation is often incorrect.
This calculator determines your weighted average hourly wage, which accurately reflects your earnings based on the amount of time spent at each specific pay rate.
Why the "Simple Average" is Wrong
A common mistake is to simply add the pay rates together and divide by the number of rates. This is incorrect because it ignores how many hours you worked at each rate.
Incorrect Example:
Job A: $20/hr for 40 hours
Job B: $100/hr for 1 hour
If you just averaged the rates ($20 + $100) / 2, you would get $60/hr. This is misleading because you spent almost all your time at $20/hr. The true weighted average is actually around $21.95/hr.
The Weighted Average Formula
To calculate your average hourly wage correctly across multiple pay rates, use this formula:
Average Wage = (Total Gross Earnings) ÷ (Total Hours Worked)
Step-by-Step Calculation:
Calculate Pay for Each Rate: Multiply the hourly rate by the hours worked for that specific rate.
Sum Gross Earnings: Add up the total pay from all rates.
Sum Total Hours: Add up all the hours worked across all rates.
Divide: Divide the Total Gross Earnings by the Total Hours.
Common Use Cases
Overtime Calculation: Blending your regular rate with time-and-a-half (1.5x) or double-time (2x) hours.
Freelancers: Determining your effective hourly rate when you charge different clients different prices.
Shift Differentials: Calculating earnings when night shifts or weekends pay a premium over base pay.
Tipped Employees: Averaging base hourly wages with varying tipped hours (provided you convert tips to an hourly equivalent).
Example Calculation
Let's say you worked the following schedule in a single week: