What’s A Stipend? (And How It Differs From An Hourly Wage)

By Chris Kolmar - Nov. 13, 2020

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When you’re applying for new jobs or new career paths, understanding the difference between stipend wage and hourly wage can help you decide what your next move might be. It can help you choose between taking an internship, an apprenticeship, or applying for a new job.

There are important distinctions to be made when you consider stipends. Whichever option you choose needs to be right for you and your needs, and what you choose may not work for everyone. There are several advantages and disadvantages of hourly and stipend positions, and you should consider them before making any big decisions.

What Is a Stipend?

A stipend is a fixed amount of money provided to people pursuing unpaid work to help cover financial support for things such as housing and food. It’s important to note that stipends are typically tied to internships, apprenticeships, or academic endeavors and make sense for individuals looking to enter these types of fields.

Stipends differ significantly from hourly wage. If you receive a stipend, you may be exempt from partial or fully paid employment. However, if you are entering a job where you are ineligible to receive a regular salary, a stipend could be a perfect fit for you. Stipends can work for researchers, postdoctoral students, graduate students, clergy, interns, and apprentices.

Typically, to be eligible to receive a stipend, your job must be focused on training and learning. The training must benefit the recipient rather than the employer for which you are working. There are fewer things to consider on an hourly wage, and your compensation is yours to control.

Is It Better to Work by the Hour or on a Monthly Salary?

A salaried job provides a fixed payment that’s often indicated as an annual amount. Salaried employees receive consistent pay based on the company’s pay schedule that equals their annual promised sum. You are not paid for the hours you work in these instances, but you are paid the same amount every pay period.

On the other hand, working an hourly position will allow you to be paid for the amount of time you put into your job. When you receive your pay depends on the company’s pay schedule. Hourly wages often provide the option for overtime pay, giving you time and a half if you work outside your normally scheduled hours.

The option that is better for you typically depends on personal preference and life circumstances. If you have a lot of regular bills to pay, a salary might be more preferred to ensure you have enough money each month to cover your bills. However, if you have a lot saved or are offered consistent hours, hourly wages work just fine.

Salary and hourly wages also depend on the type of job you’re performing. Hourly workers can vary from cashiers to nurse aids to administrative assistants. Salaried positions might include accountants, marketers, engineers, and sales professionals.

If you are considering an hourly pay role, be sure to ask how consistent your hours will be. Depending on the type of job, you may work in the typical 9-5 workday hours, but if you explore a profession such as nursing or as a cashier, your hours may vary. Be sure to understand this before you commit to anything to ensure it fits with your existing schedule.

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Pros and Cons of Hourly Wage

There are many things to consider when you apply for an hourly paid job. Below are a few of the pros and cons we’ve identified to help you make the right decision for you and your life.

  • Pros

    • Overtime. As mentioned above, hourly pay often comes with the benefit of working overtime. Working overtime allows you to be paid your standard hourly wage, plus half of that wage, per hour. You will work longer, of course, but you’ll make more money once you go over that forty-hour mark.

      Overtime is usually offered to hourly employees, especially if special projects or events are going on within the company. Holidays can also be an excellent opportunity for overtime. If you can spare the extra time, it’s a great way to pick up additional hours and even more pay than usual.

    • Minimum wage. No matter what, you will be paid minimum wage or above for every hour you work. This is important in contrast to salaried employees, who could work much longer days for less pay, depending on their salary. You are guaranteed to be paid for the exact hours you work, which may be very important depending on the industry and field of work.

    • More flexibility. Hourly wage allows you to be slightly more flexible with your schedule. Depending on the job, you should typically be able to coordinate the hours you’d prefer to work. For example, many companies may offer hourly wage workers to work early morning hours, allowing you to be off work in the afternoon. This leaves the remainder of your day to do with what you please.

      Additionally, you are more likely to feel less guilt if you need a day off from work or time off from work. It becomes easier to find someone to cover your shift, as they know they’ll get paid for those hours they’ll put in.

  • Cons

    • Consistency. One of the biggest downfalls of hourly work is consistency. Depending on the organization, your hours may differ from week to week, and you may not be guaranteed a set number of hours, which means your pay lacks consistency. Additionally, if hours are cut across the company, hourly employees will suffer the most. Without work, you do not receive your hourly pay.

    • Unpaid missed workdays. Just as with the lack of hours, missing a day of work will result in a day without pay. If you are sick or need to take time off for an event or something else, you will likely not receive compensation for that day unless you have accrued enough hours for a paid day off. This can be stressful, especially if you get sick or hurt unexpectedly and need to take time off to recover.

    • Less freedom. Although you may have more flexibility in your hours, you will likely have much less freedom as an hourly paid employee. You must stick to the strict lunch and break schedule and be available for a wide variety of hours before your schedule is set. It is most likely that you will not be paid for the time you are away from your work for lunch or break time.

Occupations with Large Wage Differences

It’s no surprise to most workers in the workforce that pay will vary for a variety of reasons. Wages can vary depending on the unique skills and abilities one brings to a job. Additionally, no two jobs are the same, and variations can affect what employees are ultimately paid, even within the same industry and occupation.

The more apparent the skill variations are, the more significant the pay difference. But this is not true for all types of jobs. For example, folks who work in an occupation with less variability among their skills will see smaller discrepancies with their wages. It all depends on what path you choose.

There are a few reasons why wages can vary, including:

  • Credentials. Workers with certain qualifications or certifications may earn more than those who don’t. This can include any special training for specific industries or college degrees.

  • Past experience. As with most jobs, the experience you’ve obtained from your previous positions play a significant role in your pay. If you’ve been doing the same type of job for a long time, chances are you will get paid more than someone who is just entering the field. Workers who have skills that are in high-demand may also earn more.

  • Industry. Wages will vary significantly depending on the type of industry you are in. Additionally, if you have experience in fields like legal, medical, or finance, you may be able to earn more than those who don’t. Often employers will look for candidates who have experience in certain industries, so they don’t have to train for the job and the industry.

  • Employer. Depending on your employer, your wages may differ. This could be due to diverse working conditions, types of clients, and specific training needed for the job.

  • Job responsibilities. Just as the industry and employer, the job responsibilities will likely vary by company. Jobs involving more complex or time-consuming tasks will pay better than those that don’t.

  • Geographic location. Depending on where you or your job is located, your pay may vary. Some states or areas, usually near cities, will offer higher wages for jobs. This is due to local demand and the cost of living in certain geographic locations.

  • Performance. Some jobs reward good performance and operate in a competitive environment.

Depending on your job, your pay may depend on your success in specific areas. Especially if you are in a sales role, you may even be rewarded with commission or bonuses if you hit certain milestones for your team.

Occupations that have the biggest wage differences vary across industries. Below, we’ve listed the most significant ones you should be aware of by industry.

  • Arts, entertainment, and sports. These types of occupation wages can vary widely by skill and experience. Actors are among the most prominent professions with the most substantial wage differences, but athletes, sports competitors, and directors and producers follow soon after.

  • Healthcare. Healthcare is a massive industry that includes workers with a diverse set of credentials and levels of experience. Licenses and certification may also differ, resulting in wage differences. Podiatrists have the most significant gaps in wages of any healthcare organization, followed by optometrists and general internists.

  • Management. Management roles can vary widely by industry and type of management. You can have the job title of manager but actually not manage a team beneath you. Similarly, you can be a manager with over a hundred reports or just a few. The role with the biggest discrepancy is advertising and promotion managers, with general and operations managers and sales managers following soon after.

  • Sales, business, and financial. Sales are a different type of occupation, and pay will vary depending on commission, bonuses, and salary or hourly income. Sales professionals can include real estate brokes, wholesale and manufacturing sales reps, and pharmaceutical sales representatives. The pay will vary widely for these roles. The roles with the biggest pay difference were agents and business managers of artists, performers, and athletes. Securities, commodities follow these, and financial services, sales agents, and real estate brokers.

  • Science, math, and engineering. These roles differ based on education levels for these types of workers. For example, geoscientists have the most significant pay difference, with physicists and actuaries following close behind.

  • Other occupations. Other occupations for law, teaching, and air transportations can also experience pay differences. The occupations with the highest difference were judges and magistrates, followed by lawyers and airline pilots.

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Chris Kolmar


Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.

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