should I take a pay cut?
While discussing consulting rates with two companies recently, I was forced to face an interesting question – when times are bad should I be willing to accept reduced rates? Should people who work for salaries be willing to accept pay cuts for new jobs – or even worse, pay cuts in their current job? Could you justify making 75% (or less) of what you once made, just to keep making money? Or is it better to grit your teeth and keep searching for – at least – pay equal to your previous position?
This question first of all depends on whether you’re in a position to weather a long downturn. If you’re living paycheck-to-paycheck, this question is answered with a resounding “yes, take the pay cut, just keep money coming in.” If you have some money set aside, you may be able to hold out longer for a better rate.
But what about taking that lower rate when you move on to the next job? Do you think the excuse that “it was just a filler” will work? Do you think the next company will bump you back up? When you’re working as a consultant or freelancer that might be the case – rates do fluctuate a bit. If you’re working for a salary, though, it’s going to be harder to justify returning to the salary you had before you took a cut.
And what about titles, or responsibilities? Does it appeal to you to work your way back up the line? For most people it is not desirable if avoidable. Nobody wants to be the 40-year old supervised by a 23-year old.
It’s not always easy. I know plenty of people who, for one reason or another, have had to make the decision to scale back in their careers, either salary-wise or responsibility-wise (or both). People do it out of fear or desperation or sometimes simply out of a desire to work, no matter what the level.
Many people may see this as an analytical question: should you accept an X% reduction in pay during economic hard times? I think this is a question that can only be answered by the individual in each case – finding a balance between pride and the need to work. Can you be effective knowing you’re working as hard (or harder) for less? Can you make do? In the end, it’s not something a career blog or a coach can help you with; you need to know whether you can handle the reduction, and live with the consequences.