The formula
real hourly pay = (gross − commuting cost) ÷ (hours worked + commuting hours)
Where it comes from
Comparing two offers on gross annual pay ignores two costs that can be enormous: the hours spent commuting, which are your time even though nobody pays for them, and what you spend getting there. Count both and the offer that pays more sometimes leaves you with less.
How to work it out by hand
- Note the gross pay, weekly hours and office days for each offer
- Work out the commuting hours in a year, counting both directions
- Subtract what you spend travelling from the gross
- Divide by the total hours each offer takes up
What is worth knowing
An hour of commuting a day is 460 hours a year on five days in the office: nearly three months of full-time work that nobody pays for. That is why remote work comes out so high in this comparison even on lower gross pay. What does not enter here are the things not measured in money per hour: stability, what you learn and who you work with, all of which matter more over a few years than the difference on screen.