The latest trend among millennial workers, who are constantly dealing with an ever-evolving (and largely terrible) workplace, involves lowering their starting salaries in exchange for more distinguished job titles. The idea is that a more impressive job title serves to improve your social status and shows a clear progression in your career (although, whether job titles actually have a significant effect on your future career remains unclear, since recruiters tend to pick up on your achievements more so than whatever you’re called).
Titles aside, though, workers frequently consider taking pay cuts for all kinds of reasons. Maybe their current high-paying job is stressing them to death, so they’d rather take a less profitable gig that’s more chill. Or perhaps their once-booming company has started showing signs of collapse, so they’re thinking about finding something less lucrative at a more stable business.
But whatever the situation, is taking a pay cut ever a good idea? “It depends on what you want,” says career strategist Daisy Swan. “People do this all the time, though. Attorneys leave career paths that offer excellent incomes, since they can’t tolerate the lifestyle. Instead, they go into foundation work or nonprofits. That’s not an unusual path.”
To that end, software developer Chris de Steuben tells me he took a $20,000 pay cut in exchange for a job that made him happier — and he believes it was a great decision. “I was way overpaid, I hated the vibe and they were using software that I had no desire to learn, so I hit up the recruiters at another company and joined their team at $20,000 less,” he explains. “The people, chillness and perks at the new company more than made up for the pay cut.”
There are similar tales with equally happing endings all over Reddit, like this one from oldstalenegative (sic):
“I did it and don’t regret it at all. The reduced paycheck is well worth the increased quality of life. I went from daily deadlines and 50-plus hour weeks with only two weeks vacation (plus sick time) at $94,000 to a much less stressful, 35-hour maximum weeks at only $78,000. But now, I have over two months of vacation, plus hundreds of hours of sick time that I never use. I’ve never been happier.
“While my coworkers are still suffering through traffic, I ride my bicycle to work every day, and I’m home on the couch with my wife 15 minutes after 5 p.m. Now, my main worries are not bicycling 200 days a year because I’m taking so much vacation.”
Of course, in a situation like this, you also have to ask yourself whether you can afford to take a pay cut. Sure, happiness on the job is awesome, but staying financially afloat is imperative, so only take a pay cut if you’re completely sure you’ll be okay living with less money.
Another thing to ask yourself, as several redditors point out: Is trading money for happiness now going to reduce your retirement savings enough to make life really stressful down the road? Again, that’s up to you to decide, although I’ll let you in on a little secret: Reaching retirement without much in the way of savings totally sucks.
As for our last scenario — whether you should take a pay cut to jump ship from a failing company — that also depends. On the plus side, staying at a failing company often means less competition, and therefore, higher chances of moving up before things really fall apart. On the other hand, crashing companies are often unpredictable and extremely stressful, so in this case, the best course of action is simply quitting while you’re ahead.
One last consideration you should have before taking a pay cut is how doing so might impact your long-term career, since Swan says employers may grow suspicious of someone who’s willing to take less money to do a similar job. “You may really need to rely on your contacts to explain what you’re trying to do,” she suggests.
All in all, though, I totally support taking a pay cut in exchange for a job you actually enjoy. After all, there’s no point in making more money if you don’t have the time or energy to enjoy it. And there’s especially no point in making more money if you’re going to die from a work-stress-induced heart attack before you get a chance to spend it.