I read two articles in the past two weeks about the reality of pay cuts in today’s bleak economy.
The first, by Chris Isidore, Unemployed Face a Reduction in Income – Permanently, in CNNmoney.com was sobering. It is a necessary but certainly not uplifting reality check.
The second, Penelope Trunk, the Brazen Careerist’s blog posting, When It’s OK to Take a Paycut, is more a wake-up call than a mere reality check. Her seven points make us focus on the critical factor here, which is, as she says, “You are not your salary. You are not worth less in the world because you are paid less in your job. Get your self-worth from a wide range of things and a pay cut won’t matter to you. Focus on the components of a good job: learning, personal growth, friends at work, and a good family life. All those things are worth a lot more than a pay cut.”
Here, in summary are her eye-opening, insights on when it is ok to take a pay cut:
“If you want to change careers. Look, you are stopping doing something that you know how to do, and you are going to start doing something you have not done before. Why would you think you will not take a pay cut?
If you are over 40 years old. Pay peaks about age 40 for everyone except surgeons and lawyers. So if you are 40 and job hunting, take a pay cut. It’s not going to kill you, but holding out for a raise might lead to fears of starvation.
If you have been unemployed for six months. Statistically speaking, you will have to take a pay cut to re-enter the workforce. So instead of holding out to be a superhero of job hunts, just take a job. So much of our self-worth comes from working that ditching unemployment far outweighs avoiding a pay cut.
If you’re relocating back to family. Research from Nattavudh Powdthavee of the University of London shows that to make up for the decrease in happiness that you experience when you leave family and friends, you would need to make $133,000 more than you were earning before the relocation. So it stands to reason that you can take a substantial pay cut to move closer to family and still gain a net happiness benefit..
If you will get a great boss. When it comes to the job hunt, getting a boss who will be a great mentor matters more than the job you’ll be doing for that boss. The number-one factor that determines your earning power is your schooling. The number-two factor is the quality of mentoring you get. Since most of you are out of school, mentoring should be your number-one concern, and you’ll more than make up for a pay cut by gaining a good mentor.
If you are having mental health problems from not working. Work provides a lot of things: a sense of belonging, sense of purpose, structure and balance to a day, as well as financial security. You can get all these things by short-circuiting your job hunt and taking a lower-paying job. Wondering if you are having problems big enough to qualify for this one? Are you gaining weight during unemployment? That’s a sign that you’re masking new emotional problems. Get a job.
If you need better insurance. Taking a pay cut to get better insurance is like buying peace of mind. And at a bargain rate, really. If all you need to do is take a pay cut to know that you will not go bankrupt from medical bills (the most common cause of bankruptcy, by the way) then it’s worth it.”