What would it take for you to accept a pay cut?
I’m asking for a friend.
A reader sent me an email last week about a job situation she was facing. She also complemented me. OK, fine. She said she enjoyed my awkwardness.
It’s. Still. A. Win.
I immediately hit reply (after I did a little happy dance behind my keyboard). I let her know that I would be happy to weigh in with my two cents, but like all things on this blog, the best stuff is in the comments.
So blogger and reader pals, take a look and let us know what you think in the comments below:
[Penny’s note: Just a little formatting hint. The text of the email appears in its original form in italics.]
Do I Accept a Pay Cut?
What are your thoughts on taking a pay cut to land a more dependable job?
Of course, my mind started reeling right away when I read this question. This is not just any personal finance question. In a lot of ways, this is THE QUESTION. How could I even answer? Where to begin? I needed more context. Of course, Penny, keep scrolling.
I work for an elected official (small time, local, not Federal) who is retiring a year from now. The rumor mill is working overtime regarding what will happen, and who will be the next person to hold the position. None of the most likely possibilities look good for me. It’s not uncommon for a newly elected person in that position to totally clean house, a.k.a. fire everyone. We’re an at will state, and have even less protection working for an elected official. There’s also already starting to be some backstabbing in the office by people trying to preemptively prove their worth to one of the likely candidates; people being set up to fail, finger pointing, and blaming. It’s deteriorating rapidly.
Office politics are the worst. My stomach was doing that queasy, flippy thing in solidarity as I read.
The Other Option
I’ve applied for a job with a different agency, not under an elected official, and with much better benefits. I believe the interview went extremely well. The work seems interesting, the office seems like a nice place to work, and for the first time in my adult life I felt more like they were trying to convince me to take the job, and less like I was trying to convince them to hire me. It sounds perfect, except for the pay.
This job would come with over a $4.00 an hour pay cut. Some of that would be recouped by lower insurance costs, lower/no deductibles, better retirement matching, and a better chance for merit raises. However, it would still result in less money in my pocket.
The commute is the same (it’s in the same building), so no changes in expenses there. It also offers very similar holidays, vacation leave, and sick leave accrual.
It was at precisely this moment in her email that I *knew* I had to leave this up to blogger buddies and reader friends here, because I think I am entirely too biased to not say TAKE THE NEW JOB AND RUN!
Our financial situation isn’t fabulous. We’re currently paying down a lot of debts, and digging our way out from some really stupid financial mistakes. A pay decrease would hurt, but not be devastating. Losing my job a year from now would likely be catastrophic.
What do you suggest? In some ways it makes sense to me to take the job if it’s offered, and in some ways it makes sense to bide my time at my current job for as long as possible.
My Two Cents
First of all, I have to pause on the context that the reader left at the end of her email. She wrote, “We’re currently paying down a lot of debts, and digging our way out from some really stupid financial mistakes.” And what I feel like she really needs to hear is this: GO YOU!
It’s far too easy to focus on any bad money decisions you’ve made in the past, especially when you’re facing a tricking money situation in the present. But it sounds like this reader is really making incredible strides toward getting her financial house in order. So, I have to celebrate that first!
The next thing I have to acknowledge is that I’m going to write my reply based almost entirely through my lens and my experience. Why? Because anyone can Google, “Should I Accept a Pay Cut?” to see what The Right Answer Is. And also this situation hits close to home. Mega close.
Here’s what I would do:
- Lose a lot of sleep.
- Feel really guilty about even considering leaving my place of employment.
- Remember all of the good times (and conveniently overlook any of the aggravation).
- Lose more sleep.
someall of the chocolate.
- Accept the pay cut.
In the spirit of full disclosure, there was a lot of crying, a little bit of drinking, and too much impulse spending when I was in a very similar situation at the start of my teaching career.
When I first started teaching, I got RIFed twice. The second year, I actually felt very similarly to how the reader feels at least as near as I can tell. I could see the writing on the wall. It wasn’t a matter of if I would be fired and NOT rehired, it was only a matter of when. I could sense that even if I wasn’t cut this year, that the RIFs would go on for quite some time. So I started interviewing again.
It was so painful because I felt so loyal to my job. My boss was great, but I knew he was retiring. More than that, though, I knew I was actually making a difference in the lives of my students. They were so much of my world that the thought of leaving them gnawed away at me.
But I did eventually leave. I ugly cried in the middle of class at the end of the school year, and I got wrapped in a hug that went 32 kids deep. But I packed up my classroom, and I let the ink dry on a contract that would pay almost $10,000 less a year to start.
Why in the world would I, a young teacher, accept a pay cut, especially a gigantic one?
It’s actually really simple.
Some money is better than no money.
I had just started a Master’s program that was going to cost over $10,000. I was waiting patiently for my then-boyfriend to propose. I had my sights set on buying a house and traveling more. And you know what all of those things have in common?
They’re really freaking expensive.
So I took the sure thing. And that’s what I would tell this reader to do as well.
But like all things in money, it’s never that simple.
RELATED POST: Why Money is Always More than a Math Problem
So I say, take the new job offer and find a way to make the pay cut work. It’ll be hard work. Very hard work. Not just to find the wiggle room in her budget somehow or to pick up a side hustle to make room. But also because it’s emotionally exhausting to perform any kind of break up or severing of ties, personally or professionally.
The good news is that it sounds like she put herself in a position where she can leave on a good note and not burn any bridges. But if the office politics are anything like she describes, that’s one bridge I’m not so sure I’d be too sad to see in my rearview mirror.
So Tell Me…What do you suggest? Should this reader bide her time? Or take the other offer and run?