So you're thinking of taking a pay cut — either with a new
When should you take a pay cut? The short answer is, almost never, but there are a handful of situations that warrant giving a lower salary a second thought.
1. You've been unemployed for over six months
Or three months. Or longer than your personal financial threshold currently allows. If you've blown your reserves and are getting to that point where you just need something to help keep you afloat, taking a pay cut might not be the worst thing in the world. Remind yourself that it's only temporary, and set your mind to either excelling at the company and moving into a new, higher-paying
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2. When you're moving someplace more affordable
Let's be honest: There's a pretty big difference in the cost of living between, say, Oklahoma City and San Francisco. If your work is taking you to a city where it's much easier to live on less, your pay cut might not sting as badly. Check the PayScale Cost-of-Living Calculator to get a sense of what industry professionals in your new city make, to be sure you aren't taking a step backward.
3. When you're starting fresh in a new industry
Nobody likes being the low man on the org chart, but sometimes taking a lower position is the only way to pivot into a new industry. If you've spent the past five years working as a pharmacist but have always dreamed of working in editorial, brace yourself for the reality of a pay cut.
Everyone has to start somewhere! (And as a side note, don't forget to factor in the differences in compensation between the two industries. Some fields pay notoriously less than others. As unfair as it is, it's just the nature of the game.)
4. When you're off-loading
Maybe being a manager wasn't all it was cracked up to be. Maybe you're moving from a director to a manager role. Maybe you're back in a low-stress staff or specialist role. Either way, in considering whether or not taking a pay cut is right for you, don't forget to compare your workload and responsibilities. If you'll have a particularly lightened role in your new position, the pay cut might be reasonable.
5. When you're going to work for a nonprofit
It's no secret that nonprofits tend to be tighter on funds. If the organization is one you feel particularly passionate about, taking a pay cut might be okay with you. Before making the jump, make sure you won't be setting yourself so far back that you can't get back to where you were in your next role.
Resources like the PayScale Salary Survey and CommonGood are great for weighing offers from NGOs, and sites like Idealist and the B-Corps Job Board are great for finding jobs with organizations who believe in paying for it.
6. When you're doing work for your mom
This is really about the only time I can imagine recommending someone accept lower compensation for the work they provide, and I suggest doing it very sparingly. As someone who very strongly believes that you should not work for free, if there were ever a time to offer a discount, it's probably only fitting to give it to the woman who gave you life.
Otherwise — and I don't care if it's your mentor, neighbor, former boss, future sister-in-law, etc. — think very carefully about taking a pay cut for your services. Your worth is your worth. Be proud of it!
7. When you're living your dream
Maybe you want more flexibility. Maybe you only feel like putting in 20 hours a week. Maybe you want to live and work off the grid making handmade furniture out of reclaimed fallen trees (though I have to say, West Elm has seemingly found a way to make even this pretty profitable…). Maybe you're launching your gourmet hot dog empire and it's going to take a while to start paying yourself back.
Whatever your dream looks like, contrary to popular belief and the tidal wave of young start-up CEOs rolling in the dough right out of college, building your empire takes time. And money. If you're living your dream, it's okay to take a pay cut to help it come to life. Figure out your financial bottom line, chart a plan for how you'll get back to where you were, and go from there.
Navigating the waters of salary is confusing, and taking less money for the same work is almost never necessary. If you aren't facing any of the scenarios above, don't be afraid to negotiate for a number that's fair. And if they won't negotiate, don't be afraid to say "No."
