Will that new job mean taking a pay cut? To accept it or not…
If you’re looking for a new job and you get an offer that pays less than you’re used to earning, should you accept it? As with so much in life, the answer is not a straight yes or no. You’ll need to weigh your own immediate needs, your long-range career goals, and the current employment landscape before taking a pay cut.
3 factors to consider in taking a pay cut
The current employment landscape
We are living during extraordinary times that have resulted in loss of employment for many individuals, a shift in how some industries conduct business, and a contraction of the economy. There’s a lot of talent available right now to employers. At first glance, taking a lower salary might seem necessary. Even some who have been able to keep their jobs have seen their hours and pay cut temporarily.
On the flip side, some organizations are struggling to find enough qualified hires to fill openings. Depending on the industry and the skills you bring, you could be in great demand and find it easy to communicate the value you bring.
Your long-range career goals
The career path you’ve set for yourself may have had to be adjusted this year due to an uncertain future. Don’t feel bad — even the experts have difficulty projecting how long economic recovery will take because there is still so much we don’t know about the trajectory of the pandemic, how long it will take to have an effective vaccine widely available, and the impact on the economy.
Nevertheless, it’s still wise to plan for your future as much as possible. Perhaps changing course makes sense if your current industry or the one you were most recently working in has experienced contraction. In that case, think of accepting lower pay as a “re-tooling investment,” says author Nick Corcodilos. “A lower-paying job might be the price you pay for an opportunity to gain a foothold in a new field or business, and to learn new skills.”
In more normal times, taking a pay cut was viewed as a ding against your future. It was thought that doing so would make it more difficult to be seen as bringing value to a higher paying job in the future. Currently, though, there is less chance of that negative stigma because of the universality of the pandemic and the understanding that adjustments have been necessary for everyone.
If you are taking a pay cut, will your salary rise when things improve? Probably, but not right away. History has shown that normally after an economic downturn, salaries have rebounded to at least close to earlier levels, although it could take several years.
Will taking a pay cut have an adverse effect on your immediate needs?
Paying your mortgage and buying groceries cannot wait for a better offer. If you have a cushion set aside, maybe you can afford to hold out for higher pay. Each situation is different and you must decide what aligns with your long-term career goals.
Don’t forget the value of benefits in your salary negotiations. Health care, paid time off, retirement accounts, educational benefits, and more can be worth thousands of dollars a year, says financial writer Brian Martucci. “Depending on your situation, a job with lower take-home pay may actually be to your financial advantage if the benefits are right,” he writes.
A recruiter can remove some of the guesswork from your job search. We know which employers are hiring in the industries we serve and what their salary ranges are. We can facilitate a match where everyone thrives. Send us your resume today!