If you were among the millions of unemployed workers looking for a job in 2009, would you accept a 50% pay cut? That's the question that Shaun Chedister faced last year, according to CNNMoney. And his answer, after spending eight months looking for a new job, was yes. Unfortunately for Chedister, that pay cut meant giving up the lifestyle he had enjoyed before he got laid off.
Chedister had been making $125,000 at Washington Mutual but he was laid off from that job at the end of 2007. He spent eight months looking for a job to support his wife and four children. He ultimately accepted an offer from Ernst & Young as an executive administrator -- the catch? The job paid slightly more than half of what he was making before -- $66,000.
The problem was that Chedister's unemployment had run out and he still had bills to pay. Chedister is looking for a more affordable house and in December one of his cars was repossessed after he got behind on the payments. This hurts but once you lose a job you have two choices: keep looking or accept what's offered -- and that offer is likely to be less than what you made before.
In considering the odds that waiting for a better offer will pay off -- think about whether more people are likely to be joining you in the job search in 2009. If you think that the answer is yes, then accepting what's offered might be the right move. Unfortunately, since 70% of GDP growth comes from consumer spending, these lower job offers are likely to mean more layoffs as companies adjust their productive capacity to the lower spending power of the average American.
Are you looking for a new job? Have you recently landed a new one? Was the salary the same, above or below where you were before?
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio published his eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing on December 26, 2008.
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Reader Comments (Page 1 of 1)
1-02-2009 @ 11:30AM
JL said...
I guess I would accept it for the time being and then keep looking for another job in the meantime. I just finished undergrad recruiting in the fall and found a job with a base salary of $64,000. I was aiming more for $65k+ but the offer was ok with the bonuses and such.
1-02-2009 @ 11:58AM
DOUG said...
this is what the rich in the u.s. want to happen so can pay less for bigger profit watch the insurance also they don't wish to pay any of that no more either.
1-02-2009 @ 1:10PM
BR said...
The $66,000 salary is actually 53% of his old $125,000 salary, not less than 50%. Plus his new salary will put him in the 15% tax bracket while the old one was probably in the 30% tax bracket, so his take-home pay will probably be about 70% of his old pay. The old salary was unrealistically high, just like house prices on the two coasts were. The new salary is still above that of 2/3 of workers in this country.
1-02-2009 @ 1:04PM
Iridium said...
Thank your lucky stars that you could get a job that pays $65k. Sorry if I don't say oh poor baby.
Many peoole are lucky to even get a job that pays $24k. If you have to take a cut from over $100k sure it will be tough to not have a ton of money but you'll still be able to live pretty well.
Sure at $65k you might have to sell the huge house you bought when you were maing over $100k but you can still afford a very nice house. You may need to trade in your Lexus for and Hyundai Genesis. Not too bad.
Or maybe you might need to cut down on expensive nights out. One of my ex girlfriends was so upset because she only got an offer for $80k at a government job getting out of graduate school. I wanted to slap her in the face.
Seriously what people believe they are worth today just boggles the mind. If I valued myself the way some others do I would be worth $100k an hour.
3-14-2009 @ 6:38PM
nic said...
i am amazed by folks who don't seem to 'get' a job paying less is better than no job at all. like our local police dept. bitching about paying more for their take home cars. let em be off work for awhile- see which is better.
1-03-2009 @ 4:29AM
BsA said...
#4 I feel you babe. I have cops calling for donation for the time; yet they make decent money, like $80k plus perks. It's not a good idea to unemploy cops; you force them to become criminal
1-03-2009 @ 7:30AM
Marianne said...
I took one for 30% less pay, it makes surviving tough but it is better than not having anything at all. I continue to look for one that will help me start rebuilding my base to get back to where I was.
I have been in the work force over 30 years, my old rate of pay was NOT inflated, but earned every step of the way. Employers want young people, so I am finding AGE DISCRIMINATION alive and well in the US. I have a degree and experience, (and a few more good years to contribute something of value) it should be worth something...
1-10-2009 @ 6:50PM
Jim said...
He was overpaid in his last job.
2-24-2009 @ 11:09AM
Texrat said...
After doing the math, I see I can take a 42% cut and still provide for my family barring major disasters or loss of my wife's job. Previously I had dealt with a 20% reduction (2003). Looks like globalization is working out well... for SOMEone, somewhere...