Ideally, your paycheck should keep increasing until you retire. However, truth remains that people end up taking jobs that pay lesser than their last ones for a variety of reasons. Besides, getting raises can be challenging for people who are already at good stages in their careers. So, when does it make sense to accept a lower salary for the same role or a comparable one?
You Get Better Perks
Workplace benefits play an important role in your overall compensation package. If the company you wish to join is offering stock grants in lieu of a decrease in pay, you might have reason to consider. This is because public equity is basically cash, and you can list the same on your mortgage application. What you need to account for is how much the stock will need to drop before it becomes unprofitable for you. A better than existing insurance package might also warrant your attention. Other benefits can come in the form of free on-site childcare and financial assistance for education.
You Need Work
If you are unemployed and need a job in a hurry, accepting a job with the same role at a lower pay might be in your best interest. This is because there is no telling when a desirable job might come your way. Besides, you can still keep looking for better opportunities.
You Need to Retain Your Job
There have been numerous instances of pay cuts because of the COVID-10 pandemic. A study carried out by Hewitt Associates suggests that more than 15% large businesses have decreased base salaries owing to the recession. These include names such as Hewlett Packard, The New York Times, and FedEx. Even the entertainment industry has been affected, with Jay Leno’s 50% pay cut being a prime example in case.
It Seems More Rewarding
Are you at the top salary range in your existing organization and see little to no room for growth? If so, you might think about moving to a company that offers a more fulfilling and engaging role with better long-term prospects, even if you stand to make lesser money for the time being.
You Wish for a Better Work-Life Balance
A survey conducted by Mom Corps shows that around 45% working adults would give some percentage of their salary up for increased flexibility at work. Consider this example – you get to work from home for two out of five days a week if you are willing to take a slight cut in your pay check. If you feel that you crave more personal time, this might be the path to take.
You Enter a New Industry
You might have to deal with a lower salary if you move to a new industry or if you take your expertise to a different department in the same organization. For instance, if you move from programming to sales, you will retain your industry expertise but lose out on your functional expertise. A decrease in salary could also be on the cards if you move to from programming for a leading tech company to programming for a government agency.
You Are Relocating to a Place With a Lower Cost of Living
If you are moving from a place with a high cost of living to one with a lower cost of living, accepting a lower salary makes sense. This is because it is fairly common for employers to pay lesser in areas that have low costs of living. The cost of living in New York and San Francisco, for instance, is higher than that of Salt Lake City, which is why salaries in the first two cities are typically higher.
Tackling the Interview
Your interviewer might want to know why you are willing to accept a lower paycheck. This is because there might be concerns about how long you will stick around with the company. Unless you wish to take the job because you have no other option, prepare to answer this question honestly.
Conclusion
If you plan to take on a role with a lower salary, make sure you are aware of all its financial implications. Remember that you are free to negotiate and make a counter offer, which can be up to 10% more than the original offer. Determine just why you are taking a cut in your paycheck to avoid heartache further down the road.
