Should you ever take a pay cut?

Often, when you’re applying for jobs, you can get desperate. If you’ve been looking for a while -- whether you’re unemployed or just plain bored -- you might start considering sacrificing some elements of your dream career just to find something now. You may even be considering a job that would require you to take a pay cut. But is that really a good idea? Before you say yes, you need to CAREFULLY consider the following:

1. Have you tried negotiating? You should always negotiate your salary when you’re looking for a new job -- understand that prospective employers expect that you will counter an initial offer. If the company suggests a rate that’s below what you’re currently making, be sure to let them know, and fight for them to at least match your current salary. Reiterate your current worth as well as market value for the job. If it’s a large company, they should have the budget to match your salary -- and if they can’t, run away from the offer. By not meeting your ask, the company is indicating it doesn’t value its employees, and you're likely to encounter this problem again if you take the job and try to grow within the organization. If it’s a smaller company that may not have the budget to match your previous salary, see if you can negotiate other benefits, like extra vacation, flex time, or stock options. You may be able to make up some of the lost paycheck value in other ways. If the gap is small and the company agrees to your terms, great. If they won’t budge, you should probably walk away. Not caving at all during a negotiation, especially when a candidate isn’t asking for more than they’re worth, is a huge red flag.
2. How will this affect you down the line? If you’re transitioning from another career to entertainment, you may have to start at the bottom, and that will likely mean a pay cut. You can’t expect the salary from your consulting job to carry over to an agency assistant position. If you truly want to start over, a pay cut may be inevitable. But do your best to negotiate a slightly higher wage than the standard pay -- your previous professional experience makes you more valuable than someone straight out of college. However, if you’re staying in the same career path -- one side of entertainment to another, or simply a company transition, your salary history should follow you. If you low-ball yourself now, you’ll have a hard time justifying a larger pay increase down the line. Remember that most raises are determined by a percentage increase. If your salary drops from $60k to $50k, a performance raise of 10% wouldn’t even get you back up to the scale you started at. Consider if the opportunity is really worth the long-term sacrifice.
3. Are there other positives of this new job? If the new job requires a pay cut, it absolutely needs to make up for it in other ways. Maybe it’s in another city where the cost-of-living is lower, and you’ll be able to afford to buy a home even in a lower income bracket. Maybe you’re tapped out of growth in your current line of work and a pay cut for a new job will set you up for a long-term career where you can thrive. Maybe your personal circumstances have changed, and you need something part-time or less intense so you can manage other aspects of your life, like health or parenthood. You’re the only one who can determine if a pay cut will create new opportunities. Just be sure that you’re thinking with your logical brain and not your desperate brain. It may help to sit down with a trusted partner or friend and weigh the pros and cons -- someone who isn’t desperate for a new job may be able to think more rationally and assess if your reasons/positives are real or excuses.

Unless you're making a career transition into a new field that requires you starting from the bottom, we're pretty firmly against taking a pay cut. It’s almost never worth it, and you don’t want to kick yourself five years from now when you’re a slower earner than you anticipated. But it’s up to you to do your due diligence. The decision to take a pay cut can have serious implications, so consider your options carefully.

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