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Would you take a 10% pay cut if it meant saving an employee?

by J. Money on Wednesday, January 7, 2009

I just got out of a company meeting, and I’m flying high baby! My 2 weeks away from the office was a nice break for sure, but the economy was putting some doubt in the ol’ job security department :( That meeting turned my frown upside down though!

Our CEO assured us that our company is staying strong, and that things are looking up for ’09!! And not only that, but that cutting people is the last option on his mind! We’ll still lose a few benefits here and there for sure (i can probably kiss my 100% matching 401k away), but at this point I’ll TAKE IT! haha…I really don’t feel like looking around for another dream job right now.

Before this meeting, however, I was playing a rousing game of “would you rather” with a few co-workers of mine, and we came up with a really interesting side question. And since it’s one of my all-time favorite games to play, I thought I’d drop it on ya:

Would you be willing to cut your salary by 10% if it meant saving another employee? And what if there was a randomized chance that the employee in question could be YOU?”

TOUGH one, right?! 10% is a lot no matter how much you make. And if you’re not a great rainy day saver or budget’er like some are, this could def. knock ya on your feet. Plus, is it even worth the risk? Would you be more comfortable losing 10% than 100% if you were the unlucky employee? Even morally – could you stand by and watch your cube-mate walk out the door all because you couldn’t chip in a little? Definitely no right or wrong answer here though…we all have our stuff going on.

And since I asked it, I shall now answer it. While the frugal side of would get up and bitch-slap me, I’d 100% bite the bullet and take my pay cut. For one thing, i’m too much a panzy to risk losing my dream job no matter what the odds are ;) That, and everyone knows each other pretty well since we’re a small company. I certainly wouldn’t miss one or two of them, but I doubt they’d ever get fired anyways. So that would leave ME, along w/ the rest of my closest co-workers to get the boot.

I’d gladly give away $8k for total peace of mind. Okay, well not *gladly*, but I’d still do it. Who knows, maybe that good kharma would turn around and we’d all get rewarded down the road?!

How about you all? Would you tell the employee to F off, or would/could you pull out the get-out-of-jail-free card?


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{ 19 comments… read them below or add one }

1 David Schwartz April 29, 2010 at 7:50 am

Worker productivity is higher now than ever before. Businesses are already getting more from each employee, there’s no reason they should pay less. Bloating payrolls will just prolong the economic distortions that are causing unemployment.

Every employee makes less. That puts competitive pressure on your competitors to cut their payrolls. That also means every employee spends less, sending a ripple throughout the local economy. There’s no good karma to be had here.

And the guy who got fired might have made a real difference at the next company he worked for. Now he’ll be working for a company that doesn’t need him.

No, I would never go for such an arrangement. (Unless I was overpaid in the first place.)

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2 Gholmes May 3, 2010 at 2:12 pm

Our salary was cut 4.75% last year to not have layoffs, 10% would of been brutal but manageable. If I saw the 10% as permanent I would probbably look at other opportunities.

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3 J. Money May 4, 2010 at 11:57 am

Yeah, this post was written over a year ago when things were pretty bad out there. I’m REALLY glad things are picking up a bit more these days but to be honest I’d still take the 10% cut ;) But again I feel like I’m overpaid anyways…it’s too bad all my comments got wiped away when we made the Wordpress move – there were a ton of really insightful messages left here… But now we got new ones – thanks!

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4 R July 12, 2010 at 10:47 am

I took a 10% wage cut in August 2009 and almost a year later I am still 10% down and no yearly pay rises either so am really 20% down in 4 years!!! loosing 10% for a year has crippled me and I have already worked through 70% of my savings and don’t know how much longer I can survive!! I would say don’t accept an cuts as you will never get them back!

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5 J. Money July 12, 2010 at 10:55 am

Oh man, that blows sorry to hear. Is there any way you could pick up a side gig, or find other ways to bring in some additional revenue? Do you have a lot of crap that you might be able to sell and get some extra cash? Hang in there!!!

Oddly enough we’re actually getting 10% paycuts pretty soon w/ nothing good coming out of it. I think I jinxed myself.

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6 R July 12, 2010 at 11:06 am

I have opened my own part time business to help make up with this pay cut and am currently scrimping and saving everything I can. The most sucky thing is that we have a meeting with the MD in August and I know that we are not getting the 10% full stop ever!!! We never got anything in writing and never signed anything. Make sure you get something in writing and it’s all legal. Because we did nothing and just “accepted” the cut by being silent we cut off our own noses! We never had a time limit on the cut and never asked for one, it was not given. Most people are “happy” to have a job, I’m not!! My wages don’t cover my out goings how can that make me “happy” It is all rubbish!!!

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7 J. Money July 12, 2010 at 11:11 am

Ouch. Great work on the part time biz though! That’s great you’re actually DOING something about it, ya know? Most people would just complain and hope that magically everything gets worked out. The only reason I’m okay w/ my 10% cut is that I’m happy at my job and I have some side stuff lined up that I’d like to jump on 100% in the future – so every day here getting a paycheck, whatever it is, gets me that closer to the finish line. If I didn’t have that, I’d be freakin’ out too.

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8 R July 12, 2010 at 11:30 am

I’m in the same boat with my part time business to, I want to do it full time now but customers list not quite there just yet!!! Give it another year and then maybe. That’s the only reason that I could stay at my current job otherwise would be totally stuffed! I don’t know how co workers are coping!?! Good luck with you business and I wish you every success in the future.

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9 J. Money July 12, 2010 at 11:32 am

You too :) Let’s convene again in a year and see congratulate each other on making it!

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10 R July 12, 2010 at 11:34 am

It’s a deal, here’s to world domination and NO pay cuts ha ha ha :o)

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11 Hal July 28, 2010 at 8:09 am

I am in this exact situation right now. We have been asked to take 10% pay cuts. It’s not compulsory however someone will be made redundant if we all don’t. It might be me, it might not, I just don’t know.

I have opted to take the cut as I can cope without it for now. Some of my colleagues will not take the cut so we will definitely have redundancies later this year. I just hope that as I have been co-operative and a team player it all works out for me. In any case I am looking for another job before they can get rid of me or the whole company sinks.

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12 J. Money July 28, 2010 at 10:14 pm

Yeah, good call! I’d totally take the cut now too just to be on the safe side. It really sucks when you have no say in the matter, but it beats unemployment and and stressing out hardcore! Now you can search for jobs and take your time until you find a good fit :) Good luck!

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13 Budgeting Money September 27, 2010 at 8:17 am

I would say don’t accept an cuts as you will never get them back…

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14 JD November 30, 2010 at 7:52 pm

Luckily the company that I work for here in the Philippines serves Fortune 1000 companies so taking a pay cut is impossible plus I’m very secure of my job. To save an employee, I would gladly take a pay cut in a heartbeat since I have a side business so taking 10% out of my paycheck wouldn’t be such an impact to my financial goal.Although, If it would then I can always quit & find the same job in other company with a much better pay.

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15 J. Money November 30, 2010 at 9:06 pm

Funny thing — We actually had to take a 10% PAY CUT!! Not for my make believe question above, just cuz of the economy ;) I jinxed myself!

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16 JD November 30, 2010 at 9:58 pm

I’m sure things will be better J. Philippines was affected too by the Recession in the U.S., so there were companies that either closed for business permanently or laid off thousands of people here in my country. Having other means to earn money aside from a 9-5 job is always better than relying only on just one income. Before I had my business, I always feel a little guilty on spending 4,000 pesos (which is equivalent to about $100 your money) but because I’m now earning more splurging 2-3 times in a month isn’t so bad. We are working for our money so why not treat yourself from time to time, right? Although having money is important, enjoying life is just as important or probably even more.

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17 J. Money November 30, 2010 at 10:03 pm

You got that right, my friend. I don’t plan on sticking around the place for much longer anyways – it’s time to do MY projects. We’ll both be running our biznesses together ;)

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18 Linda March 1, 2011 at 10:44 am

This situation actually happened to the nonprofit organization where I worked. Upper management (six people) took a 10% pay cut to prevent layoffs. Later, our branch office (e people) was asked to take an across-the-board paycut of 5% to save our office. Everyone’s vacation per year was reduced by one week (from four weeks to three for most staff members) and $50 per month cost was added to our health care benefit costs. A year later, the paycuts and vacation rate were restored and layoffs were prevented.

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19 J. Money March 1, 2011 at 3:25 pm

Wow, EXCELLENT end to that story – wasn’t expecting that :) That is wonderful, I’m so glad things seem to be back on track now!

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