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?
Take the job, but don’t stop looking for alternatives, at a better pay level / an easier commute etc.
In the meantime enjoy the change of environment, the different work. It widens your experience and makes you more attractive to future employers.
I did something similar, but in reverse. I stayed in the job I was in, despite a better offer elsewhere. It turned out to be a great decision!
I wholeheartedly agree with your suggestions.
Yes, kudos for working through bad financial decisions and lots of debt. I don’t think I’ve met anyone who hasn’t been down that road, so good for you for working on it. The process of working through that and fixing it is akin to letting the caterpillar use those important muscles to break through the cocoon. Without those muscles, the caterpillar cannot fly once a butterfly. We need the learning and tough experience to enable us to fly.You can do this.?
As for the new job, I am reminded of our years as landlords. We learned very quickly that if we could not get a place rented at the price we wanted we needed to drop the price because always, always, every single time, some money is better than no money.
So this job sounds like a decent job with benefits. A quick reminder that once you accept a job you’re not there for the rest of your life. You can always be keeping your resume sharp and on the lookout for the next opportunity, unlike a landlord who is now in a one-year contract… But the stability that this job will bring, and it sounds like maybe a lot less drama? You might suddenly have the energy and wherewithal to create a side hustle.
I’ve worked my whole career in government, and during a tumultuous 2014, my Town Manager left, the new Town Manager fired my boss, there was a mass-exodus of the fun/smart/hard-working people because they saw the writing on the wall. I stayed around, picking up the pieces and trying to keep things moving as well as possible. I was doing three people’s jobs, and not getting any additional pay. After the hot seat cooled down a bit, the new Town Manager decided to fill my old boss’ role, but instead of giving it to me (the guy who was knowledgeable and was actually doing the work) he passed me up for an older lady because she had been a Kmart manager ten years prior… I had worked my @$$ off to keep things rolling, and I’d gained 40 lbs in 8 months trying to do that, from the stress involved. Needless to say, I took the first job offer that came my way, for a 30% pay cut.
But that new job had some good perks (even though it did not include holidays, vacation/sick time, or pension), but I got to do some traveling around the state, teach training sessions, and generally make connections in my field. That job directly led to my current position, where I’m making over 60% more than I made at the job I fled to. Counting my benefits package, I’m up to almost 100% above that low point.
TLDR; I’d jump for the new job and make the best of it. You never know what it might lead to in the future.
About 18 months ago, I took a pay cut to move to another job. I moved states, so with the state income tax, it’s a bit weird. But if I look at benefits and my salary, it was probably between $6-$10K. Closer to $10K when considering benefits. Sigh. I had to really gulp it down, but I knew I could make up for it in a couple years. Was it the best decision? 18 months later i don’t know. But I’m still employed, so that’s good.
Honestly, at the end of the day I work for a paycheck…so I try to maximize my earnings. I wish I could say I my work is passionate…but it’s not.
You’re friend’s situation is a bit different. She will most likely not have a job in a year due to the political situation. I would take the certainty of a paycheck.
Hope for the best for her.
I’d definitely take the paycut. It seems like just waiting for the other shoe to drop is going to be harrowing, and I’ve definitely heard of elected officials clearing house when they come into office. So it seems like it’s more a matter of when than if. I’d rather take the sure money and, like you said, try to find ways to make more money on the side. At least she’ll have better job stability and less anxiety, the latter of which might itself be worth the pay cut.
Or if she needs to move again later (for pay or another reason), she’s making the move on her own terms. Sitting on the chopping block is THE WORST.
I would totally agree with you, Penny. As a teacher myself, one of the best aspects of this profession (once you’ve been in for a number of years), is job security. While most of my friends make more and have some pretty good perks, I have also seen some of them let go seemingly out of nowhere, and the severance package/unemployment can only carry you so far. I would take the new job, and at least have the security.
Wow! The reader has done a great job of anticipating the writing on the wall and looking for alternatives. Sounds like the current situation is set to go from bad to worse. Ugh.
I’m also in the camp of “take the new job and run.” Here’s why:
– Even if you were to survive a lay-off, the post-lay-off work environment will be terrible.
– The year leading up to this transition sounds like it’s already getting bad
– A job loss could be catastrophic to your situation
Then, when we look at the new job, it seems to have solid long term potential:
– Good work environment
– Good opportunity for increases and advancement
– Better benefits
So while the reader is looking at a pay cut now, it sounds like there’s opportunity to make that back, and then some, over time.
So I say “run, don’t walk” to the next gig. Work the finances to absorb this bump in the road and keep pushing forward. It sounds like a great investment in your long term future!
I would take the pay cut. And keep applying/interviewing for higher paying positions. I agree with you Penny, some money is better than no money.
I took a pay cut when I left the public library for the university. Some of it evened out because the benefits are so much better, but also I had to work more hours at the university than the library. But management at the public library was stressing me out so much and I knew that if I stayed, I would grow bitter and that would bled into both my professional and work life. (Truthfully, it probably already had)
I think the uncertainty of if/when I would be removed from my position would stress me out so much that the pay cut would be worth eliminating the stress.
Moriah Joy @ Our Table for Two
Take the money and RUN! If the writing is on the wall, a job is better than no job (as has said every other comment on this site so far, haha). But if staying leads to unemployment, that’s a bad plan. And you can always work towards more money in the future. If the $4/hr isn’t going to kill you, then dooooo it!!
Do you know if there would be room to negotiate salary? I know some gov jobs have set pay scales for set serve or skills, but if there is even a little bit of room for $1 more pay an hour it would help. I have always been terrible with this myself so I only mention it as what I have learned in hindsight.
I would suggest taking the job either way. You don’t want to stay in your current toxic environment as it will only get worse and lead to job loss.
I love the idea of trying to negotiate! I assume there’s a pay scale or a salary schedule, but it never hurts to ask! Especially since they seem so enthusiastic about her!
I would take the pay cut and move to another job. If you know that you will be out eventually you can get some time to get settled into a new job and move on your own terms vs try to find something when you are out of a job. If they offer you the job (and I hope they do) take it and run!
I would take the pay cut. I also work in the local political world, and if things are already derailing that rapidly, I suspect the incoming would be all but forced to clean house. I’ve gone through one transition already and am currently going through my second and I can tell you, even if you make it through the first round of cuts, they’re often not done cutting. Usually, there’s a second round of cuts after the newbie gets their feet under them and observes the workings of the office.
Once there’s an offer on the table, I would ask if there were any room to close that gap, but accept it regardless. If there is no negotiating room at the new position, I would at least ask (now, and get it in writing if possible) to have your salary reviewed after 6 months or a year. This way you can get on that merit raise train sooner rather than later. Good luck!
Maggie @ Northern Expenditure
TAKE THE NEW JOB AND RUN! 😉 Current job makes more money, but with a job loss, you could have a period of unemployment which would lead to NO money. New job=better benefits and more job security. Worth it in my book.
I’d 100% take the new job. Three years ago I was working full time in a job I enjoyed for the most part although the office politics sucked and the total commute was 3 hours everyday. My husband has a great job but no set quitting time – he’s done when the work is done which made it difficult to do anything in the evening and weekends were full of chores.
Then my dad passed away at the the age of 72. He’d been battling a form of Parkinson’s disease that progressed quickly. As a result, he and my mom never really go to do the retirement they had planned and saved for all those years of working.
On the plane home a week after his death, hubby and I were talking and we realized that life is just too short to not live today.
After I got back to the office, I realized just how much those office politics were taking from me and my family and I quit with a small plan.
Now I work part time for myself doing similar work which luckily can be done from wherever there is internet. The rest of the time I’m a homemaker doing the dishes, laundry and all those things we tried to cram into our evenings and on weekends.
The pay cut was significant – probably about 65% – but what we’ve saved by not having a cleaning lady, eating out all the time and most likely divorce lawyers more than makes up for it. And for what we’ve gained – time with each other, our family and friends; weekends to relax and have fun; a 7 to 10 year plan for retirement; and time to travel – right now I’m writing this on a deck in Mexico – is worth every sacrifice.
Financial security is important and we really had to adjust our budget and priorities but once we decided to live now while planning for tomorow it made all the difference.
I too took a $10,000 pay cut when I accepted a ‘sure thing’ job. The pay cut hurt, but the stability counted for a lot. It meant that I could plan and be certain that my future would unfold more or less to plan. The energy that I was expending on worrying could be re-directed to more productive things. If your job is no longer stressing you out, you have time and energy to spend on a side hustle, or self-development or just enjoying your life.
Take the pay cut. It’ll all work out in the end.
Mrs. Picky Pincher
I say take it and run!
The money is obviously very important, but you also have your sanity and happiness at stake, too. If the office culture is deteriorating, you don’t want to stay there as it slowly gets worse. You couldn’t PAY me to go back to some of the toxic workplaces I was once at, no matter the money.
Also, if there are good promotion opportunities at the new agency, that’s something to consider. Maybe a long term approach makes the $4/hr paycut less painful? Also, is there room for negotiation on the pay? It might not be possible for a govt agency, but if they know the pay rate is the only thing standing between you and the offer, they may increase the rate. (I successfully got $7/hr more after negotiating once, although not with a govt agency).
I’d take the pay cut for all the reasons stated above, plus:
You said it “sounds perfect except for the pay.” If you wait, this sounds perfect job might not be available when you are finally forced to move and you might have to compromise on other parts of the equation.
If you can afford the cut, I’d take the perfect sounding job now.
That’s exactly where my mind went! I think I would make the move when the ball’s in my court like it is for her now.
As with other commenters, I agree that there are more than two options:
– While the current job sounds miserable, she could keep it and keep looking for and applying to other jobs that pay the same (or maybe even more!).
-She could negotiate with the new job to bring her pay closer to her current pay.
– She could take the new job and keep looking for a better-paying position if she doesn’t get raises quickly.
It sounds like she’s experienced and a great job candidate so she shouldn’t sell herself short! Re-entering the job hunt can be intimidating, but she doesn’t have to limit her own options.
I might misunderstand the timeline here, but it sounds like she’s got 8-9 months to find a new job.
If that’s the case there is no way I would advise taking a pay cut right now. She can almost certainly find a great paying job in 8-9 months.
With a 6+ month time horizon, she’s got time to job hunt. Plus she can start a side job in the meantime to prevent any catastrophic loss of income.
Be confident in your value, reader!
That’s so true, too!
I just went through a similar situation myself. I decided to take the pay cut, and I can honestly say that I am SO glad I made that decision. I was able to get out of a toxic work situation and into a much more healthy and balanced position. That’s worth much more than any dollars could give me! Ask yourself this: Is money the ONLY thing holding you back? Because if everything about the job feels like a good fit aside from the money, then that’s a sign that you might want to try and make it work. On the other hand if money is only one of several things that give you concern, then perhaps it is not the best opportunity. For me, money really was the only thing holding me back, so I talked with them and negotiated the pay. I was very honest with them that I was excited about the opportunity and I wanted to make this work but that I made much more in my current position (and gave them the amount). They couldn’t match my salary but they came up significantly so I took it. You have nothing to lose by simply asking, and, depending on their response, you might have a better idea if the job will work for you. Best of luck! I know it’s a tough and very personal decision. If this opportunity ends up not being the right one, I hope a better one comes along soon!
I read one response that mentioned negotiating and I wonder if that is an option. Before accepting the pay cut (which is where I would go) ask for more. Mention your current pay and see if you can split the difference. There have been studies done on how women are so much less likely to negotiate wages and therefore they don’t get them. Even if they say no, it’s always better to ask than to assume.
So many great responses here! I agree that leaving the current job is totally reasonable, and a pay cut may not be devastating. It sucks, but there are many ways (as Penny, Queen of Side Hustles, knows full well), to make extra cash. Negotiating for a bit more to help narrow the gap a bit might also not hurt. But leaving a toxic work situation is almost always the right answer!
I would take the new job and leave the current one immediately especially with all the office politics going on, not a great environment to be in.
If possible, can she negotiate for higher pay? Either way, take the job if offered. And she could look into moving up the company ladder after 6 months or a year depending on her job performance so she can get the pay rate she wants
With her financial situation, since she is getting it in order I hope that the pay cut will not hurt her finances a whole lot.
Those were my feelings, Kris! I think it’s nice when the “ball’s in your court”, and it sounds like she’s in a very volatile workplace right now. Perhaps it’s me projecting (or the past-life version of this since I love where I am now!), but I think it would be nice to move forward from a place you’re happier to be in.
TAKE THE NEW JOB AND RUN!
Sorry.. I think Penny already said that. Oh, well. Another vote for GO! Don’t look back. Toxic work environments suck the life out of you.
Haha. Thanks, Kevin! I’m glad it’s not just me spitballing advice. I don’t even think we can really truly realize what a toxic environment takes from us while we’re in it. I imagine she will feel so much better when she’s somewhere else!
I would quit. It sounds like the work environment is only going to get worse and if you can make it on the lower pay it’s not worth the stress of staying in the current environment. You never know, there may be opportunities for advancement in the new department and leaving the current department while still in good standing may be helpful in the future.
That was my thought as well. Get out well the getting is still good. It sounds like she’d be able to get references, etc., now but you never know once office politics take over!
After my second mat leave I plan to take a huge pay cut (but I am going to only work part time).
I would take the pay cut because your happiness is worth it rather than deal with high stress at work.
I have a coworker’s husband who just retired from his job doing engineering. They offered him another consulting job but he declined and is applying to be a postoffice mailman instead for fun. I guess it’s different though since he has “F U” money and doesn’t need it.
I love that you’re able to do that for yourself and your family! I also think that you’re right about the stress. That cost can add up in so many ways. If only that were easier to confront!