Falling Down the Career Ladder

Pop quiz: You’re out of work, you can afford to keep looking and you just got a job offer that can best be described as, eh. What do you do?

The question of whether to accept an offer that’s only so-so or, worse, beneath one’s pay grade is a growing source of angst for the 14 million Americans who remain unemployed.

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Some maintain that a lengthy gap on your resume renders you less desirable to prospective employers, suggesting it makes the most sense to take the mediocre job, collect the paycheck and continue your search for a better fit.

But taking a position that you don’t really want can do just as much damage to your resume cred, not to mention your future earnings potential, warns Ken Schmitt, president of Turning Point Executive Search firm in Carlsbad, Calif.

“In fairness to your employer and yourself, you should never accept any job unless you’re willing to commit for at least a year,” he says. “What happens is you’ll be unhappy and end up leaving in three months. Then your resume starts to look very unstable, which makes it harder to get employed.”

When It Pays to Step Down

There are times, of course, when it makes good sense to settle for less.

If you’re strapped for cash, for example, it’s a no-brainer. You do what it takes to pay the bills, says Lynn Berger, a New York-based career coach.

Likewise, if you’re in an industry that’s shedding jobs such as manufacturing, financial services, or publishing, it might also pay to take a lesser position outside your field for the sake of job security.

“If you’re in a career that’s on the decline and you feel that your job is threatened you have to create a different situation for yourself,” says Berger. “You have to think about opportunities in your own field.”

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That's all the more incentive to live on less, she notes, if the new employer is willing to help pay for retraining or continuing education that will leave you more marketable in the modern job market.

The decision of whether to take a job with diminished pay or prestige also hinges on how long you’ve been unemployed.

According to Schmitt, job hunters at the senior executive level should take the first reasonable opportunity that comes along if they’ve been pounding the pavement for more than a year. The threshold is six to nine months for lower-level professionals.

As of the fourth quarter of 2010, the Bureau of Labor Statisticsreports that nearly 11 percent of those on the unemployment roll had been looking for work for two years or more.

“If you’re doing all the right things, like spending 80 percent of your time networking, setting up informational interviews and coffee meetings, using online job postings and reaching out to your alumni network and you still haven’t found something within a year, it probably makes sense to take a lower-level position,” Schmitt says. “Skill sets become stagnant much more quickly than they did 10 or 15 years ago, so employers start to worry if you’ve been out of work for too long.”

Erika Safran, a certified financial advisor with Safran Wealth Advisors in New York, agrees.

“You hold out for the brass ring only if you know that the career you are in is viable and if you have the resources to support your quest for the desired position. But not everyone has that luxury so at some point reality and expectations have to meet,” she says.

Your Job, Your Life - A CNBC Special Report
Your Job, Your Life - A CNBC Special Report

Your age, she notes, is also relevant.

“People in their 50s who are unemployed are going to be long-term unemployed because companies are looking to pay less for younger people and get more bang for their buck,” says Safran, noting those at the top of the salary scale may have to be more flexible than their lesser-paid peers.

Don’t forget about benefits either, she cautions.

With the rising cost of medical care, even a short-term lapse in health insurance can expose your family to significant financial risk—especially if one of you is managing a chronic condition.

As such, and depending on your family’s health care needs, you might decide that the insurance benefits alone make up for the loss in pay.

Crunching Numbers

“If you don’t have health insurance and COBRA ran out, I would strongly recommend either purchasing it on your own, which is expensive, or getting into an employer situation where they cover your benefits while you pursue another job,” says Safran, noting the end in that case justifies the means.

Do the Math

Before you determine whether to take a job with a lower salary, though, you must first determine whether you can afford it.

Start by crunching the numbers to determine how much you need to maintain your standard of living and whether your new paychecks will be sufficient.

If not, you’ll have to decide whether the job is worth the price—and where you’re willing to scale back to make the numbers work.

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“Define what your expenses are and determine at what point a salary will no longer be acceptable,” says Safran. “If you recognize that the job you’re trained for is no longer valued in the marketplace the way it once was, then it’s time to really change your lifestyle—perhaps geography, career or your housing situation.”

As with all new jobs, she adds, you should also consider the impact your new salary will have on your long-term financial goals including college savings for your kids and your retirement fund.

A significantly reduced salary means you may not be able to contribute as much to your 401(k), which ultimately effects the size of your future nest egg.

“If you’re not making enough money you’re going to be balancing two things—your immediate cash flow and your long-term future savings goals,” says Safran. “You have to reevaluate and decide what needs to change and how you can reduce your expenses to not only be able to buy food and pay your mortgage today, but save for your retirement.“

Your Job, Your Life - A CNBC Special Report
Your Job, Your Life - A CNBC Special Report

If you decide to hold out for a higher paying position, try casting a wider net by working with a career counselor to determine what other options you have based on your interests, education and skill set.

A Fresh Start

In today’s job market, where the supply of available labor outweighs demand, those looking for work are facing tough choices.

Taking an offer with diminished pay and prestige isn’t easy, but it may be the best move if it offers increased job security or benefits your family needs.

Just be sure you know what you’re getting into, and how your new salary might impact your lifestyle and financial goals.

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“If you take a job and it’s lower-paying you really want to make sure that you like the job, the responsibilities and the people because the reality of the situation is if you stay there it’s very hard to get back to where you were before,” says Berger. “You’re going to get raises based upon what the job is.”

Remember, too, that while a temporary step down can be defeating, especially if you’re more qualified than your new boss, it’s not the end of the road, says Schmitt.

“Once you get in there and demonstrate your credibility and contribution to the company, you can start to think about what other projects you can take on and who else in the organization you can support,” says Schmitt. “As the economy improves and companies continue to grow, at some point there will be an opening much more closely aligned to your background.”

In the meantime, he suggests, stay involved in networking events, join a board, volunteer with trade associations and continue to cultivate your network.

“Stay visible and stay engaged,” advises Schmitt. “One of the things we hear all the time from people who are in job search mode is that they wish they had never let their network get so stale. Have those informational coffee meetings once a month even when you are employed so you don’t have to reinvent the wheel every time you’re looking for a new job.”