When you should (and shouldn't) accept a pay cut
I recently spoke with a writer about pay cuts - when you should and should not accept one. Below is a snippet of the article, and you can read it entirely by clicking on the link at the bottom of this newsletter. If you're in a position described in this piece, reach out so we can chat about the best move for you.
(image below by iracosma).
When You Should (And Shouldn’t) Accept a Pay Cut
In the wake of the COVID-19 pandemic, some companies are reducing salaries to avoid layoffs. Still others are proposing to lower salaries for tech pros who decide to work from home permanently and relocate to an area where the cost of living is lower.
If you are facing a pay cut, what should you do? You can choose to accept or decline the request, but your decision may have consequences.
Here’s a look at the times when you should say “no” to a pay cut and the rare times when you should say “yes.”
Say No to a Pay Cut When…
Your Boss Agrees to Let You Continue Working Remotely
There is no justifiable reason to reduce your salary if your company agrees to permanent remote work and you subsequently decide to move to an area with a lower cost of living, explained Victoria Pynchon, a lawyer, negotiation expert and founder of She Negotiates.
“As long as you are doing the exact same job and making the same contribution to the company, your personal situation has no bearing on the value you bring,” Pynchon said adamantly.
After all, should a company pay a single apartment dweller less than someone with a family and a big mortgage, so long as they are doing the same job? Most people would agree they should not.
While Pynchon acknowledges that many companies factor in market conditions and geography when setting salaries, considering someone’s personal situation creates wage inequality, which tech firms have been trying to overcome. Bringing that point up may help tip the scales in your favor.
Revenues are Down, Profits are Flat
Don’t agree to a pay cut just because sales are declining… unless the business is no longer profitable or running out of cash.
Some businesses have found ways to temporarily reduce operating costs by slashing discretionary bonuses, dividends, travel expenses and advertising expenditures. As a result, the company’s profits are holding steady even though sales are falling.
If the company can meet its expenses and its profit outlook is positive, then there’s absolutely no reason to accept a pay cut. Plus, the courts have ruled that ... click here to read the rest of the Dice article.