Taking A Pay Cut: Is It Worth It?
By Calli Tapler
In the boom times, taking a pay reduction was pretty much unthinkable. You worked hard and did well so you got a raise or a better job that paid more money. A decrease in salary was seen negatively, as if you'd done something wrong in your career.
But today, in these tough economic conditions, the tune has definitely changed. That negative stigma is diminishing and it's more acceptable and commonplace to take a salary reduction. In fact, chances are good that you, or someone you know, will be faced with this question at some point in your career. So, when is it worth it to take a pay cut?
- You are currently unemployed and need a job. Whether you've been unemployed for five minutes or five months, it is imperative that you consider all job opportunities, regardless of salary. It is better to have a job that pays you less, than no job at all!
- You're starting a new career. If you've made the decision to change careers, you will likely start near the bottom of the salary ladder until you build up your experience.
- You're changing industries. Sometimes it is necessary, or desired, to switch industries. For example, you are a marketing professional in the real estate industry, but take a new position in the medical marketing field. Since all of your industry expertise doesn't transfer, you may end up with a lower starting salary.
- You're in love with the job. You found your dream job...or close to it. Great company, easy commute, fabulous people. Happiness and overall job satisfaction can far outweigh a higher salary in a less fulfilling situation.
- You're getting better benefits. What you aren't getting in take-home pay, you are making up for in stock options, health insurance, 401k match, and other company benefits. Your paycheck may be smaller, but your overall compensation could be greater.
- Your hours are awesome. You can't put a price on a great work schedule. Maybe you get to be at your son's soccer practices or you have time to hit the gym every morning. Whatever the case, a flexible work schedule can be a huge benefit.`
- You can telecommute. Saving on gas, wear-and-tear on your car, and time commuting is worth its weight in gold. That cost savings alone can justify a lower salary.
- You're moving to an area with a lower cost of living. Salary ranges are altered by the cost of living in an area. Make sure to do a cost comparison when you are relocating. You could find out that you still end up on top even with few dollars in your paycheck, because you are paying less for everything else.
- You want to stay with your current company. Many companies and industries have been hit hard by the current economic crisis. Some have reduced their workforce, while others have asked employees to accept lower salaries or positions. If you want to stay, take the offer of less money. You could always start looking for another job while you wait it out!
- You want your foot in the door. If you found a company that you like, with room for advancement, taking a job that pays less may be a good way to get started.
Already decided to take a pay cut? Check out some of these ways to live with less.
Speak Out: Have you accepted a pay reduction? Was it worth it? How did you work it out?
Calli Tapler is a director at TruYuu, an online service that helps people present themselves as more than just a resume to employers. You can connect with Calli and the TruYuu team on Facebook and Twitter.