About 47 million workers left their jobs in 2021 amid the ‘Great Resignation.’
Many of them did so for less pay.
Last year, 53% of workers who left their jobs said they made less money in their new roles, according to a January online survey of 1,000 adults by Real Estate Witch.
The average pay cut was around $8,000, according to the survey, but some workers would be willing to take an even bigger reduction. Those who quit but have yet to find another job said they would take an average $23,000 pay cut, the survey found.
The catalyst for taking a lower-paying job? Overall satisfaction and work-life balance. More than 60% of those surveyed said they were happy in their new roles, and the share of those who said they were very satisfied compared to how they felt in their old jobs increased nearly 50%.
An earlier survey of workers from Paro, which provides accounting and finance solutions for businesses, focused on those who do mental tasks for a living — such as programmers, pharmacists and lawyers. The survey found the group also prioritized their work-life balance over making more money.
“The pandemic and experiences they have had have shifted their values,” said Anita Samojednik, CEO of Paro. “Right now, the salary is just not enough.”
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 new roles. However, about 27% who switched jobs said pay was the same or less in their new job.
What 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 considering taking a job where you will make less money, there are a few things you need to consider before you make any moves, she said.
First is to ask yourself why you want to leave your current job. Are you burned out? Will a different job or career be more fulfilling? Are you planning to move?
Doing this ensures 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.”
If you’re only a few months from paying off debts or hitting another 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 this is the case, now is a great time to ask for a different schedule, to take on different responsibilities or introduce other flexibility into your job, Samojednik said.
“There is a lot more flexibility,” she said. 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 important math to do, Brown said.
This includes looking at your current budget and financial goals and seeing if you can still make them work on a smaller income.
If you will need to trim your budget, Brown suggests living as though you’ve already taken the pay cut for a few months to see how it works out. It will give you a test-run of what life will be like with a smaller salary and help you decide if a pay cut is truly what you want.
You should also think about how making less will impact 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 to you to wait?
If you’re part of a family, you should also consult the other members in your household. 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.
Source: CNBC
