In this video we discuss how to calculate equivalent earnings for different pay periods, such as weekly, biweekly, semi-monthly and monthly. We go through the formulas for each and do some examples of each.
Transcript/notes
The most common pay periods for employees are weekly, biweekly, semimonthly, and monthly.
Sometimes we may want to compare the earnings of ourselves or other employees that have different pay periods. Many times these comparisons are made as earnings per year, earnings per month, or earnings per week.
Next, we are going to look at how to convert each of the 4 common pay periods to yearly, monthly and weekly.
First, to convert weekly to yearly. If someone gets paid based on weekly pay periods, say $609 per week, there are 52 weeks in a year, so they will receive 52 paychecks per year. So, it is weekly pay times 52 weeks, $609 times 52 weeks, which equals $31,668 as their yearly earnings.
To convert weekly earnings to monthly earnings, we first convert the weekly earnings to yearly earnings, which we just did, weekly earnings times 52, then we divide the yearly earnings by the number of months in a year, 12. So, in our previous example of $609 per week, which equals $31,668 per year, we divide $31,668 by 12, which equals $2639 per month.
The next common pay period is biweekly, which is a paycheck every 2 weeks. To convert biweekly to yearly earnings, we first start with there being 52 weeks in a year. Since they are getting paid every 2 weeks we need to divide 52 weeks by 2 weeks, which equals 26, so they will receive 26 paychecks per year. Next, we need to multiply their biweekly earnings by 26 to get their yearly earnings. So, if someone makes $825 biweekly, we multiply $825 times 26 paychecks, which equals $21,450 as their yearly earnings.
To convert biweekly to monthly, we first convert their biweekly earnings to yearly, which we just did, biweekly earnings times 26, then divide the yearly earnings by 12 months to get their monthly earnings. So, again, $825 biweekly pay equals $21,450 yearly earnings, and we divide $21,450 by 12 months, which equals $1787.50, as their monthly earnings.
To convert biweekly to weekly, we just divide their biweekly earnings by 2 to get their weekly earnings. So, $825 divided by 2 equals $412.50 as their weekly earnings.
The next common pay period is semimonthly, which means they get 2 paychecks per month. To convert semimonthly earnings to yearly earnings we first start with there being 12 months in a year. Since they get 2 paychecks per month and there are 12 months, we multiply 2 paychecks times 12 months, which equals a total of 24 paychecks in a year, so, we multiply their semimonthly earnings times 24. For example if someone makes $1944 semimonthly, we would multiply $1944 times 24, which equals $46,656 as their yearly income.
To convert semimonthly earnings to monthly earnings, we simply multiply the earnings times 2, so, $1944 times 2 equals $3888 as their monthly income.
To convert semimonthly earnings to weekly earnings, we first must convert it to yearly earnings, which we did just a minute ago. We multiply the semimonthly earnings times 24, and then divide by the number of weeks in a year, 52. In our example of $1944 semimonthly earnings, we get $46,656 as their yearly earnings, so we divide that by 52, which equals $897.23 rounded off as their weekly earnings.
The last common pay period is monthly, so 1 paycheck per month. To convert monthly earnings to yearly earnings, we just multiply the monthly earnings times the number of months in a year 12. So, if someone gets paid $2733 per month, it will be $2733 times 12, which equals $32,796 as their yearly earnings.
To convert monthly earnings to weekly earnings, we first must convert it to yearly earnings, which we just covered, so monthly earnings times 12 and then divide that by the number of weeks in a year, 52. Using our example of $2733 monthly, which equals $32,796 yearly, we divide $32,796 by 52, which equals $630.69 rounded off, as their weekly earnings.
Here is an example problem comparing the earnings of 4 different employees that all have different pay periods and converting each of them to yearly, monthly and weekly.
Timestamps
0:00 What are the most common pay periods?
0:23 How to convert weekly earnings to yearly earnings
0:46 How to convert weekly earnings to monthly earnings
1:19 How to convert biweekly earnings to yearly earnings
1:51 How to convert biweekly earnings to monthly earnings
2:22 How to convert biweekly earnings to weekly earnings
2:40 How to convert semimonthly earnings to yearly earnings
3:13 How to convert semimonthly earnings to monthly earnings
3:26 How to convert semimonthly earnings to weekly earnings
4:02 How to convert monthly earnings to yearly earnings
4:23 How to convert monthly earnings to weekly earnings
4:54 Example of all conversions for equivalent earnings
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