Dealing with a 10% paycut at work

When DH’s boss asked all the employees to take a 10% paycut everybody but DH and the guy who recruited him said yes immediately.  DH, said, as he always does when it comes to large decisions, that he would have to talk to his wife.

After talking it over with his supervisor, his colleague and with me and with his colleague again, DH has decided to accept the pay cut with the stipulation that he be allowed to use 4 hours of each week working on important but not urgent tasks for the company.  He wants to make the documentation, instructions, and examples for their open source code better so that they get more clients through that venue.

He thought about saying no, but we don’t really need the money and there’s no reason to be difficult.  He thought about asking for 10% unpaid time off instead, but he doesn’t really need that time.  He thought about seeking another job, but he really likes this one and this paycut isn’t enough of a reason to leave it.  What clinched it for him, though, was feeling like he’s made more of an impact on economics than he has on his own field.  His work does, eventually, save lives, but only if it gets used and not relegated to an electronic dust-bin.   So he needs to write papers or make their main product more user-friendly so more people will want to use it.  Given the time frame and the current state of their projects, he prefers the latter to the former.

So that’s how he’s dealing with a temporary 10% paycut.

How would you deal with a two month 10% paycut?  How about not being sure if your company was still going to be around in a few months?

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14 Responses to “Dealing with a 10% paycut at work”

  1. gasstationwithoutpumps Says:

    When the University of California did “furloughs” (reduction in pay through reduction in hours, without reduction in workload), there was no option—employees weren’t asked whether they would accept it. A lot of people were worried that the pay cuts would become permanent, though closing the University entirely seemed highly unlikely. Under similar revenue crises, most companies would have laid off more people, so the pay cuts were seen as a more equitable arrangement, unpleasant as they were.

    Personally, I believe my only response was to save less to retirement funds during the furlough—I was already more frugal than I needed to be to live on even the reduced salary.

  2. bogart Says:

    Two months and 10% would be, you know, less fancy cheese. That said, what you describe your DH doing (taking action so that it’s not just “hey we’re paying you less for awhile” but more a two-way exchange) sounds sensible and right (in a moral sense) to me. Obviously not everyone is positioned to be able to do that, particularly depending on management’s reaction, making it all the more important that those who can, do (and hopefully in a way that promulgates awareness and promotes its appropriateness).

    As for the “not around in a few months,” I’ve asked myself what we would do if we lost my income and I’m not TOTALLY sure. DH brings in roughly the US median HH income, and that’s retirement benefits so won’t go away unless things get really bad (major pension systems fail). And he could put DS and me on his health insurance, which would be better (coverage for the price — though it’s still pretty lousy, but that’s the US for you) than otherwise available. Long story short, even with our mortgage we could live on what he provides, but it would take pretty major cutbacks relative to how we live now.

  3. monsterzero Says:

    I would definitely take the time off. Leaving at noon on Fridays is amazing! And I’ve nearly always worked for small companies, so I’m never sure they’re going to be around in a few months.

  4. Leigh Says:

    I would say that saying he needs to talk to his spouse is perfectly reasonable, but saying no would make him look like not a team player. I would be making sure that my cash reserves are up to snuff though in case the company goes under and I need to find a new job.

  5. Rosa Says:

    I would ask for fewer hours, but getting allocated time for stuff he thinks is important sounds ideal. Especially in an open source environment. I’d start job hunting, too, if it were me – companies doing layoffs are really depressing places to work.

    Long long ago when he was working for a startup, my husband had the same choice – they actually asked everyone to work for no pay. He was one of the few who said no, and they found the cash to pay him. I think that’s a move only an engineer can make – HR and admin and sales are all more replaceable. But it actually turned out okay for everyone, they got bought up by a big open source player and everyone got back pay and stock options and the founder made a ton of money and I think we used the last of those stock options to buy our new furnace a couple years ago.

  6. Trees Full of Money Says:

    That’s a great negotiation strategy your DH used to compensate for the 10% pay decrease. We took a 20% pay cut at work last year (down-turn in the oil and gas industry) and it was tough; and we didn’t have the option to vote on it :)

    Fortunately we had been working diligently to pay off our debt so our monthly expenses were relatively low. The pay cut wasn’t too painful, but it is frustrating working just as hard as I ever had for less money.

  7. chacha1 Says:

    I think your DH’s counteroffer is a very reasonable and productive solution.

    In my industry, they never approach business contraction with an eye to retaining staff – they just lay people off.

    If by some strange calculus the law firm DID offer a temporary paycut vs a layoff, I would definitely accept it vs quitting outright, but I would also immediately start looking for a new job. We have our household expenses *almost* to the point that either one of us could pay all the bills, for at least a few months, without undue strain; so a 10% paycut would not be truly painful let alone catastrophic. It would just be, to me, a harbinger of future ills, especially given that my base pay in this firm is already on the low side for the market.

    In my 20+ years in L.A. I’ve been laid off twice, had one department closed underneath me, and had one position eliminated (offered in exchange, the shittiest position you can have in a law office without actually being a temp. Being a temp would actually have been better but I needed the stability in order to find a new job). I’ve had to leave two other jobs because of hostile work environments. So I never consider a job secure and I always assume that my days are numbered. It’s a pretty demoralizing way to approach the work. But on the other hand, it prevents me from putting all my eggs in one basket.

  8. Revanche @ A Gai Shan Life Says:

    DH’s response sounds really reasonable and like good long term thinking.

    I think we could manage to absorb a 2-month 10% cut but it would be annoying. Still, as long as it didn’t become permanent, we could hack it. We’d cancel any immediate travel plans, for one, and reduce any other unnecessary spending for those two months.

    I’ve spent quite a lot of time expecting that my job could go away, and especially this one because it is a lot more shaky than any other I’ve had, and planned our money accordingly. I don’t love the feeling but it helps me from taking our income for granted.

    • nicoleandmaggie Says:

      annoyingly we got the info about the cut right after we’d decided to fly instead of drive to visit DH’s family at Christmas. It’s like fate telling me to not get too comfortable.

  9. Debbie M Says:

    Your DH’s response was brilliant; I greatly admire it.

    Life has only given me this kind of pay cut whenever my roommate moved out and I hadn’t yet found a new one. I could live without their rent by not adding to my savings.

    My university handled finance troubles with hiring freezes (until recently when they started having lay-offs as well). This was mostly do-able.

  10. nicoleandmaggie Says:

    Oops, forgot action items. I spent 40 min on the phone Monday morning… who did I call?
    House Financial Oversight committee is on speed dial at 202 225 5074. I again asked them to look into Trump’s financial conflicts of interest. They said they have no timeline on that. We should not give up on pressuring them to do the right thing. Maybe they want LA to become a nuclear wasteland after China bombs it.

    Then I called the Homeland Security and Gov’t affairs committee 202 224 4751 to ask them to support Cardin’s resolution. I also explained why (see: nuclear war). The guy said because of the volume of calls they get, they don’t record why, just pro or con in a tallied list. But when I asked, he said he’s worried too.

    Then I called two Republican senators on the Judiciary Committee https://www.judiciary.senate.gov/about/members to ask them to reject Jeff Sessions because he’s a racist bigot (… something they must know since he’s on the judiciary committee…). Their phonelines were busy (possibly because of stupid things they’ve said defending Trump’s recent scary actions) so I left messages.

  11. Susan Says:

    I think your DH handled it perfectly – both in the “I need to check with my partner” and in what he chose to do, to maximize impact of his work on his own “unpaid time” terms.

    One thing I’d be thinking is that a paycut means that the end of the job is looming. And with the new year coming, I’d try to pack as much into his 401k for 2017 as you can, as soon as you can, because you lose access to that tax-advantaged space once his job is gone.

    • nicoleandmaggie Says:

      That’s a good point re: 401K and packing money in. And I think something Leigh did(!)

      I don’t think we’re going to do that this time around first because it took them several months to increase his contribution after he sent the form in this fall, so the company would be likely out of business before they processed it this time (plus the only option on the form is % of salary contributed). And second because I’m currently contributing 12% to my required retirement plan and am maxing out both an additional 403b and a 457 plan, and we’re just not going to be able to afford to do that anymore without his salary, so we won’t be out of tax-advantaged retirement savings space if he loses his job.

  12. Funny about Money Says:

    Me? I’d be quietly looking for another job right now. This is what we call “not a good sign.”


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