Taking a Pay Cut

Getting called into the boss’s office unexpectedly usually goes one of two ways: incredibly good or incredibly bad. Termination is always a possibility, and when there is merit, a raise could be the reason for your meeting. But what happens when the company is struggling and needs to cut costs? Instead of being met with a congratulatory raise, your boss may propose a pay cut – keep your job but bring home less bacon.

Drops in pay aren’t wholly disadvantageous, though. There are plenty of circumstances when a pay cut, well, pays off. From an increase in other benefits to a rise in growth potential, what are the reasons behind employees accepting a cut to their salaries? We ran a 1,867-person survey to find out how many people had taken a pay cut before, and then we looked in depth at the experiences of the 990 people who reported taking at least one pay cut in their careers. Read on to see what they said.

Whether You Want It or Not

Career Pay Cuts

Fifty-three percent of respondents had taken a pay cut at least once in their careers – but it wasn’t always their decision. In fact, nearly 60% of employees said their most recent cut was an involuntary one. Luckily, a majority of the people who had taken a pay cut experienced it just once during their careers. But even one cut could have a significant impact on how much they bring home.

Considering a 3% pay raise is barely enough to keep up with the increasing cost of living, the average pay cut of 14.9% impacts employees significantly. However, the impact of a pay cut might be determined by the reason behind it. Employees who seek more fulfilling jobs and accept lower pay for new positions may actually see an increase in job satisfaction.

Preparing for Less

Financial Preparedness for a Pay Cut

While switching career paths may come with an anticipated pay cut, a struggling company might institute a salary decrease without much warning. In that case, being financially prepared can prove challenging. Compared to those who chose a pay cut voluntarily, employees faced with an involuntary decrease in salary were significantly more likely to be unprepared financially. On the flip side, the majority of employees taking voluntary pay cuts were at least somewhat financially prepared.

Of course, voluntary pay cuts are not always possible. With another recession expected in the near future, involuntary pay cuts may be a reality for a significant number of employees. So creating new budgets, cutting back on discretionary spending, and upping the contribution to a savings account can help to financially prepare workers for a potential recession and subsequent pay cuts.

Employees facing involuntary pay cuts may not have been as prepared as those willingly accepting a cut, but they were more likely to recover from the loss – compared to 58.7% of people who voluntarily took a pay cut, 63.2% of people who experienced involuntary cuts were able to, at a minimum, get back to their salary prior to taking the pay cuts. But don’t be fooled; it was not an easy or harmless feat. On average, it took employees 15 months to get back to their previous salary.

Pay Cut Decisions

Reasons for Taking a Pay Cut

The majority of people experienced pay cuts because their company couldn’t afford their salaries – 32.2% of people said they experienced a pay cut due to company budget cuts or financial problems. Changing careers and a desire for flexible hours were also common reasons behind taking a pay cut, with 28.1% and 21.6% of people citing each reason, respectively.

Interestingly, leaving a toxic work environment was significantly less common – just 13.7% of employees reported that reason – but women were more likely than men to say they took a pay cut to escape a toxic workplace. With women, as a whole, making less than their male counterparts and high rates of sexual harassment and other forms of workplace toxicity, it can be incredibly difficult for women to climb the ladder in terms of salary. But the value of a healthy work environment might be worth a drop in pay – for any gender.

The Aftermath

Are Pay Cuts Worth It in the Long Run?

Whether employees left a higher-paying position for greater job fulfillment or chose a pay cut over being let go, people in both situations believed they were in a better position in their careers after taking a pay cut. However, the positives seemed to be significantly greater when the pay cut was voluntary: Compared to 55.6% of people who took involuntary pay cuts and believed they were in a better position, 77.1% of those who took voluntary cuts believed the same.

Unfortunately, though, a drop in salary is bound to come with some financial consequences. And these consequences seemed to impact employees who were faced with involuntary pay cuts more so than those who chose a cut voluntarily. While over half of employees did not believe they were in a better financial position following an involuntary pay cut, more than 57% of those who took a pay cut by choice believed they were in a better position financially.When considering a pay cut, it’s essential to understand the situation. Does a new, lower-paying position mean better benefits and increased flexibility? Or is your current job fulfilling enough to stay and work for less? Looking at the perks of a new position, placing value on satisfaction and not just the paycheck, and reworking a budget can be some of the simplest ways to survive a pay cut. Regardless of the situation, though, it’s often worth it: 63.8% of people said if they could do it over, they would still take the pay cut.

A majority of people who take a pay cut again

New Beginnings

Nobody wants to hear their salary is being cut or that they have to take a few steps back at another job. Starting over is never easy, and when a pay cut happens, financial security can be threatened. But weighing the pros and cons of a pay cut reveals a lot – a decrease in salary is not always a total loss. An increase in benefits, more flexibility, and potential for job growth may not come with a monetary bonus, but they certainly have value.

Salaries are only one factor to consider when looking for a new job – but before candidates can even consider taking a pay cut for a more satisfying position, they have to nail the interview. With years of experience and dozens of tips, The Interview Guys are here to help. Whether you’re fresh to the job market or trying to navigate your way into a new field, our tried-and-true tips will help you land and ace your interviews, without all the boring nonsense. To get prepared and fired up about your next job interview, visit us online today.


We ran an initial survey of 1,867 people to see how many had taken a pay cut in their career. We then ran an in-depth survey of the 990 people who reported taking at least one pay cut in their careers. Respondents of this survey were 46.4% women and 53.6% men. Two respondents identified as nonbinary, and one respondent chose not to disclose gender identity information. The average age of respondents was 37.5 with a standard deviation of 11.3.

Respondents were asked to answer survey questions based on their experiences with their most recent pay cuts, but only if they’d taken more than one in their careers. 

All averages presented were calculated to exclude outliers. This was done by finding the initial average of the data and the standard deviation. The standard deviation was then multiplied by two and added to the initial average. Any data points above that sum were then excluded. 

The average percentage pay cut taken was calculated based on salary information provided by respondents. They were asked to report their personal annual salary prior to their pay cut and their personal annual salary after the pay cut went into effect. A percentage cut was calculated for each respondent, and then an overall average percentage was calculated. 

Parts of this project include data from the U.S. Census Bureau’s Usual Weekly Earnings of Wage and Salary Workers Second Quarter 2019 report.


The data presented in this project are based on self-reporting. Common issues with self-reported data include selective memory, telescoping, and exaggeration. For example, respondents could have exaggerated the amount of their pay cut or the length of time it took them to get back to their previous salary after taking the cut. 

No statistical testing was performed on the results presented, so they are based solely on means. This project is purely exploratory, and future research on this topic should be more rigorous.

Fair Use Statement

Deciding to take a pay cut can be a difficult choice to make, but it doesn’t have to negatively affect your career over the long term. If someone you know is considering a pay cut, feel free to share this study with him or her for any noncommercial reuse. We only ask that you link back here so that they can see all of our findings and the methodology employed. This also gives credit to our hardworking contributors.