When Your Target Market Shifts Downward — Should You Take A Pay Cut?

By: Caroline Ceniza-Levine

My writing colleague asked me whether or not a more experienced person should take a pay cut given the “juniorfication” of Wall Street jobs — i.e., a downward shift in the market towards lower paying and more junior roles. Companies hiring cheaper talent with fewer years of experience is not limited to the financial services industry. I’ve seen this in media, tech, and even academia.

Even if your industry doesn’t appear to be lowering salaries across the board, there may be fewer positions being filled, so you may not feel confident enough to ask for a raise (essentially lowering your salary by inflation!). Or, if you lose your job, you may be tempted to ask for less to land the next job more quickly. Whether or not to accept a lower-paying job actually has less to do with what’s happening in your industry and more about you individually. Here are some guidelines to consider if you’re asked to take a pay cut:

Yes, take the pay cut, because:

• Financially, you can’t afford a gap, and the money coming in — while not ideal — could be enough to keep you from dipping into savings or, worse, retirement funds. If money issues cause you particular anxiety, having a job, even if it’s less than ideal, could maintain your confidence when you decide to look again.
• Psychologically, you can’t afford a gap b/c you’re the type of person that needs structure, so it would be better for you to have a job, any job, while you look for something more ideal.
• You can’t 100% predict the future. Maybe you can grow this lower-paying job to a more suitable level and compensation once you’re in there. Or if it’s your same company that wants to demote you, maybe you can work your way back up when strategy, business conditions, and/or management changes. Or you might be able to coast in this job and start a side hustle to supplement your income and take your career in a new direction entirely.

[Related: 5 Negotiation Mistakes That Trip Women Up]

No, don’t take the pay cut, because:

• Financially, past salary is a strong anchor in future negotiations. If you mark yourself down it’s hard to get back up. How good a negotiator are you?
• Psychologically, you may get complacent in a junior job and never challenge yourself back up. Or, you may lose confidence and stay at a lower level. Or, you might hustle more for that better-paying, higher-level job while you’re still unemployed and feeling market pressure.
• While you can’t 100% predict the future, if your role is moving to people who are getting paid less or are less experienced, you need to adjust to a new market. Change will only come more and more quickly. If you don’t fight back now — by stepping up your job search to find one of the few remaining jobs at your pay and level or by adding to your role so that you leapfrog to a higher pay and level — you’ll be even less equipped for the additional inevitable changes down the road.

As you can see, the answer to whether or not to take a pay cut is based on the person involved, not the situation. What works for one job seeker may not be right for you, even in the same target market. You need to look at your financial makeup, your level of confidence and motivation, and your approach to change and decide what is best for you. Being honest about where you stand on this issue is critical as we move into the busy first quarter hiring season, and many New Year’s resolutions include a career transition.

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Caroline Ceniza-Levine coaches executives and entrepreneurs to fulfillment in work and life. A keynote speaker and frequent media guest, Caroline’s latest book is Jump Ship: 10 Steps To Starting A New Career (Forbes Media, 2015). She also writes a weekly advice column on Forbes (where this post originally appeared).

Originally published at www.ellevatenetwork.com.