If you were told you had to take a demotion and a pay cut (10 to 15%) to keep your job, would you?

Are you in a position to do that? What kind of lifestyle changes would this force you to make?

I would have to pick and choose how I spend my "frivolous" money. I would probably cancel my cable, get rid of garbage service, and not eat out as much, especially lunch. These three things would save me about $300/month.

1/23/2009 8:28:53 PM

I would do this, then I would consider looking around at other companies in the area hiring people in my field (i.e. companies that are on the upswing instead of the downswing, which exist in this economy just a wee bit).

Unless you are paid very little I imagine most people could stand to take a 10-15% pay cut, unless they're living too close to the edge of what they're being paid. For my near future finances, such a cut would mean (theoretically) cutting back on savings a bit and not spending money on silly impulsive stuff like video games.

1/23/2009 11:39:44 PM

it sort of depends on how much you are making to start with. going from 80K to 68K is probably easier to deal with than going from 40K to 34K. as it stands now, i wouldn't like it, but could probably get by with minimal lifestyle changes, i just wouldn't be able to put as much away in savings.

i took a 10% cut during the last downturn just after the .com bubble popped. sometimes you just got to suck it up and make the necessary changes to get by. i certainly wouldn't quit without another job lined up, especially in today's economy.

1/24/2009 12:14:26 AM

working as a consultant, I would really have to question my company if they made this move. Me making less money means they make less money from the rate they charge for me, so as long as I was bringing in work and not being a fuckup then there would be no reason to get demoted or take a pay cut.


[Edited on January 24, 2009 at 12:21 AM. Reason : if I somehow ran out of work to bring in or lost money on a large job, I could understand it]

1/24/2009 12:19:07 AM

we have been at a 20% cut for two months company wide to try to keep from firing people

1/24/2009 12:43:05 AM

My husband just went through this at his job with Geek Squad. He was the only person that held his position district wide that stayed on. We know that we would have a hard time (right now) finding health insurance as good as what we have with Best Buy and our son's medical needs are such that we just couldn't afford risking that health insurance.

1/24/2009 9:54:52 AM

yeah i would - assuming the alternative was a severance package that was less than ~4 months - at the same time i'd start looking for a different job though

although my company just lays you off and rarely is this ever an option where i am now

1/24/2009 11:54:06 AM

Quote :

"yeah i would - assuming the alternative was a severance package that was less than ~4 months - at the same time i'd start looking for a different job though"

1/24/2009 12:20:25 PM

be glad you're not taking a 30-50% cut in pay like some upper management at lenovo.

that shit right there would make me just want to go find a new job.

1/25/2009 1:39:09 AM

yeah i feel really bad for those execs!

More companies should hold their upper management accountable for poor performance rather than taking it out on those who do the real work.

1/25/2009 8:33:19 AM

Be thankful they are giving you that option. My dads company (a lumber company) has been hit hard and laying off folks over the last year. I went to the office last week and it was damn near empty. Friday they told him that after 21+ years there as the Health & Safety Director that this Friday is his last day. He's devestated right now. I think he would have gladly taken a 20% cut to keep his job, at least while he was looking for something else. With my moms health problems (MS and Hep C) she can't work and has expensive medical bills that require them to have good insurance.

[Edited on January 25, 2009 at 8:34 AM. Reason : ]

1/25/2009 8:33:43 AM

Quote :

"working as a consultant, I would really have to question my company if they made this move. Me making less money means they make less money from the rate they charge for me, so as long as I was bringing in work and not being a fuckup then there would be no reason to get demoted or take a pay cut."

same here


also, I couldn't afford a pay cut.

1/25/2009 9:39:36 AM

if i had a family to support of i would be freaking out if i had to take a cut or worse.

1/25/2009 9:54:52 AM

I would take one if that's what it took.

1/25/2009 4:00:31 PM

Well, fingers crossed, I am one of the "younger" guys. As far as the position I am in, I am on the low end of the pay scale. They are weighing cost vs. benefit and starting with the more expensive, weaker team members i.e. the underproducers. So far we have laid off +/- 25% (3/13) of the field foremen and crews and one of the two admins. One of the estimators was demoted to a non-managment field position on Friday too. Once this set passes, if things do not turn around, June will see much more drastic cuts.

1/25/2009 4:56:16 PM

I'd be ok with the pay cut if I got Friday afternoons off or something. Hell, I think you could/would get more done in less time if you offered that option to most employees--10% off your pay for fridays or friday afternoons off..assuming that you have to be semi-available for emergencies and that sort of thing of course (unless you have some sort of prior approval like if you were going out of town for like a 3 day weekend mini-vacation type thing)

[Edited on January 26, 2009 at 9:11 AM. Reason : asf]

1/26/2009 9:10:46 AM

keep your job and get paid less while looking for a new job

or sit at home unemployed while looking for a new job.

whats the dilemma here?

1/26/2009 10:42:09 AM

Employed > unemployed.

Its a cut and dry case. If you're in a position where you have other options, then certainly exercise them. Most of us aren't in that position.

1/26/2009 4:54:32 PM

Quote :

"More companies should hold their upper management accountable for poor performance rather than taking it out on those who do the real work."

Off-topic discussion, this is called a clawback policy, and only about 13% of corporations in America have it (can't remember the source I saw that from, sorry). This prevents lofty golden parachutes of CEOs or other upper management who jump ship after 1 year. Actually, it's the Board of Directors responsibility to hold companies accountable. That, and the sad reality is layoffs or pay cuts are an "easy" way to cut down expenses in a hurry.

On-topic discussion, agree with Omar's comments 100% though.

[Edited on January 31, 2009 at 7:44 AM. Reason : is, are, bah!]

1/31/2009 7:42:05 AM

i hate the term "golden parachute".

1/31/2009 11:57:22 AM

yeah i'm pretty tired of hearing that empty phrase too

1/31/2009 4:07:49 PM

clawbacks really only exsist for the top 5 highest paid executives at the most (but usually ceo only), and while their prevalence is fairly low, more and more companies are implementing them. however, they are really just a small tool to hold executives accountable as they only pertain to certain situations, most of the time being when financial results are overstated initially prior to when incentives are awarded and they are restated significantly lower after the awards have been given (low enough that if they had been reported correctly the executives would not have been awarded their annual and/or long-term incentive per their incentive plan goals).

so while it is a tool to help hold executives accountable, its really more of an insurance policy for the company. holding executives accountable really comes from setting up incentive plans that really drive business with rigorous metrics.....and you know, firing them when they totally blow

now as far as golden parachutes, executives dont get them if they quit (unless...sometimes...if its a retirement that has be agreed upon with the board of directions), they get them if they are fired. they are severance packages. i actually dont have that big of a problem with them. they are a natural byproduct of this climate where shareholders are much more intuned with the performance of companies, and so ceo tenure has gone down drastically in the past 10-15 years. what irritates me is when companies gross up to cover the excise tax.

now for the actual topic at hand.....like everyone else has said, take it if it means you get to keep your job....but keep in mind its a "keep your job for now" and look for a new one. unfortunately, it looks like you are in the construction industry, so i think salaries overall will be a little depressed for the next couple of years.

however, it does help that you are currently at the low end of your pay scale. they will be more interested in cutting the pay of people who are above market then cutting your pay.

2/1/2009 2:19:08 AM

I'm sure this varies company by company, but it has been my experience that paycut decisions were made as a percentage across the board. ie. everyone gets a 10% cut, no matter where you are on the pay scale. This was supposedly done in order to "preserve moral". I assume they meant that in a "the beatings shall continue until moral improves" sort of way.

and damn it, quit saying golden parachute

2/1/2009 12:34:24 PM

The place where my mom works had tiered paycuts ranging from 5% for lower employees to 20% for management.

2/1/2009 1:10:27 PM

Quote :

"and damn it, quit saying golden parachute "

oh its totally a lame-ass name, but its what they are called

2/1/2009 7:14:43 PM

I'm a victim of of this... however, there was no option for a pay cut. Just told me my last day will be in a month (3 weeks from now). It was a shock, but it's actually working out to be a blessing in disguise. I got an offer letter for a job in the field I actually got a degree in... 3 hours after being told I was being laid off.

2/3/2009 4:11:09 AM

hell yeah, good for you.

2/3/2009 10:48:05 AM

Thanks. To be honest, my life has gotten progressively more awesome since the day I found out I was being laid off. Maybe it's just the more relaxed/stress-free demeanor I've had since coming to terms with it. Drop in pay? Sure, for at least 3-6 months... but luckily we'll be able to handle that.

Funny how stuff works out.

2/6/2009 7:07:05 AM

I worked for a consulting company for nearly 3 years and they came in and said this is your last day, here is 2 weeks severance. I ended up getting a job with a municipality that is comparble in pay, room to move up and a ton less stress. The old company finally laidoff a secretary three weeks after I got it. 10 of the 36 remaining employees are overhead ( and somebodys brother in law or buddy from back in the day). I dont think they will be around much longer as company so it is better I got out when I did. I knew it was coming but I didnt think it would happen when it did. Im better off now though.

2/15/2009 10:55:52 AM

^a little bitter ehhh?

2/15/2009 12:50:04 PM

not bitter, but I did talk to the VP of the company last week and he said the phone just wasn't ringing. That, and the really bad business advice they got from a hack business developer ( had a masters in Phys Ed) means they will have to close the doors.

[Edited on February 15, 2009 at 1:20 PM. Reason : ok yeah, im a little bitter, I was very close to hitting an expierence threshold for a certification]

2/15/2009 1:19:01 PM

I they were taking advice from a phys ed masters sounds like they deserved it--especially in this climate.

2/15/2009 3:06:04 PM

Quote :

"keep your job and get paid less while looking for a new job or sit at home unemployed while looking for a new job. whats the dilemma here?"

I don't remember the percentages, but a large enough pay cut will qualify you for unemployment. That complicates the situation because you now have to decide if you the extra money you earn by working is really worth the 40 hours + commute + expenses that you'll have to work to earn it. In that situation I'd seriously consider the unemployment as a way to re-tool my skill set and try to enter the workforce better off than I was before.

As far as pay cuts go, I think they need to be across the board if you're going to do them. If you don't hit everybody then there will be resentment against those who didn't get the pay cut; and let's face it, that's probably going to be management. What's good for the goose is good for the gander so to speak.

2/17/2009 11:16:53 AM

If you aren't going to do them across the board then you might as well just lay off the people whose pay you were going to cut.

2/17/2009 11:40:19 AM

My roommate has been having a pretty shitty situation with the real estate firm he is an attorney for:

1) Works for them throughout law school. Both summers and every Friday for the last two years during law school (not to mention during long school breaks).

2) Gets an offer from them in the upper 60Ks, before his last semester of law school.

3) Takes a 10% pay cut right after he starts in August.

4) No Christmas bonus. Which is pretty big in large firms. Lots of big firms get close to 100% of their salary for a bonus every year.

5) After Christmas take a 50% pay cut and is added a commission on fees he collects...not bills.

He's thinking he's going to be pulling in frequent 70 hour weeks to make what he was originally signed on for. He bills plenty of fees...but nobody is paying these days. He's job-hunting, but has been a real estate guy from the get-go...and that area is just really down right now.

Sucks for him...

2/17/2009 11:46:10 AM

I would absolutely take the pay cut, and if it hurt that bad, start looking for a different job, but continue to keep working.

2/17/2009 1:22:26 PM

^

2/17/2009 2:44:53 PM

better $54k / year than $0k

2/17/2009 8:27:31 PM

Quote :

"..but continue to keep working"

always

always

always be working.

work for free in your area of expertise if you have to, but always be working. objects in motion tend to stay in motion. obviously there are exceptions for personal and academic things you definitely need time off for, but never ever lapse into a period of intellectual laziness.

3/20/2009 5:29:43 PM

^^you mean 27k

a attorney, 27K?!?!

[Edited on March 20, 2009 at 7:29 PM. Reason : w]

3/20/2009 7:28:38 PM