As the Great Resignation continues, employees are rethinking salaries, work-life balance and flexibility in their new careers.
Some are willing to take a pay cut in exchange for a better schedule.
One-third of workers who switched jobs during the pandemic took less pay in exchange for better work-life balance, according to a survey by Prudential. And, about 20% of workers said they would take a 10% pay cut if it meant they could work for themselves or have better hours.
Many workers also want job security and would trade higher pay to work for a company long-term. The survey found that 56% said they had or would consider prioritizing stability over a bigger salary.
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That could also lead to less paid overtime. To be sure, many people who switched jobs have seen increases in take-home pay. A survey from The Conference Board found that about one-third of workers who left jobs during the pandemic are making 30% more in their new roles. However, about 27% who switched jobs said pay was the same or less in their new job.
Things to consider
Of course, taking a pay cut will directly affect your finances and may not be advisable right away, according to Tania Brown, an Atlanta-based certified financial planner and founder of FinanciallyConfidentMom.com.
If you’re weighing a job where you will make less money, there are a few things you need to consider beforehand, she said.
First, ask yourself why you want to leave your current job, she said. Are you burned out? Will a different job or career be more fulfilling? Are you planning to move?
Contemplating the answers to these questions will help ensure you don’t make a rash decision you’ll later regret, said Brown.
“Emotions have no logic, and you’re trying to make a math decision based on emotion,” Brown said. “It’s just not going to turn out.”
Additionally, if you’re only a few months away from paying off debts or hitting a similar financial goal, you may want to hold off.
Plus, you may realize you don’t want to leave your job, but instead would like more flexibility or a change in your role. If that is the case, now is a great time to ask for a different schedule, to take on different responsibilities or to try to introduce other flexibilities into your job, said Anita Samojednik, CEO of Paro, which provides accounting and finance solutions for businesses, focused on workers who do so-called mental tasks for a living — such as programmers, pharmacists and lawyers.
She said she’s seen many people dip their toes into freelancing in addition to a full-time job to test the waters of a new gig or becoming their own boss.
The math
If you discover that switching jobs is truly what you want, then you have some math to do, Brown said.
That includes a deep dive into your current budget to see if you can achieve your objectives on a smaller income.
Brown suggests a trial period of a few months where you try to see if you can meet your goals on smaller take-home pay. That test run could help you decide if a pay cut is right for you.
You should also think about how making less will affect your long-term goals, Brown said. If you’re saving up for a house or plan on having a baby, how will your new income change the timelines on those milestones? If it will take longer, is it worth it for you to wait?
If you’re part of a family, you should also consult the other members in your household before making your move. That means talking with your spouse and children about what changes would take place, such as fewer trips or less money for extra activities — and deciding if it works for everyone.
“This has to be a family decision because your decision is impacting everyone in the household,” said Brown.
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One-third of workers who switched jobs during the pandemic took a pay cut in exchange for better work and life balance, according to Prudential.