Desperate times call for salary cuts
CNNMoney.com recently had an interesting article about high salaried executives who have been laid off in our struggling economy and are now taking massive pay cuts to get back into the working world.
“Life After A Six-Figure Salary” was an interesting article to me. A) I don’t know if I’ll ever see a six-figure salary in my lifetime and B) Sometimes that relieves me – especially when those are the sexiest people to lay off when a company is struggling.
What also was interesting about this article was that although the “real-life” people CNN talked to have had to take salaries that are half of what they are used to making, the overwhelming response to this is a feeling of relief.
I’d like to think that I’d be that gracious if I was in a similar circumstance, but I’m not sure what my reaction would be if I was living high on the hog only to have the rug yanked out from under me.
What the article did not address and what I would have been interested to read is if these people expected their job loss – had they prepared with an emergency fund? I would also be curious if CNNMoney would revisit this article in a year’s time or so … would these people still be relieved that they are employed or are they resentful of the cuts they’ve had to make? Also – what would happen if they were offered their old jobs or a comprable job back at the same salary they had made before. Would they still continue their frugal lifestyle or would they go back to their old style of living?
This is why I’m glad I don’t make a lot of money. I’m happy to take the road less expensive where the choices seem a little more black and white. The ditches aren’t as deep here either …
Posted: January 6th, 2009 under Good Reading.
Comments: 3
Comments
Comment from Denise
Time: January 6, 2009, 9:09 am
I think, after taxes, that a salary of $100,000 isn’t as much as everyone thinks. Especially if you have a family. I’ve taken paycuts before. Ironically, when I got my college degree and went from bartender to journalist, I took a 50 percent paycut AND suddenly had student loans to pay. So much for higher education.
I think it’s a lot easier to take a pay cut if you are young, single or in a couple with no children, and rent rather than own a home. More flexibility.
It’s a sad state of affairs when there is a dearth of well-paying jobs in this country. Many people, including highly-educated engineers, are taking pay cuts. I suppose this is what comes with globalization. The standard of living in the developing world rises, and ours must fall.
Comment from Paul
Time: January 6, 2009, 12:23 pm
My take on salary is usually that you will spend what you make, no matter what it is. Now by “spend” sometimes that means investing in a retirement account, paying ahead on your house, etc. but no matter how big my salary is, in 11 years it’s always gone at the end of the month. I’m very thankful that I am fortunate to have a good paying job, but I also know I’d make it work if I didn’t.
The last comment is also very true – $100,000 isn’t as much as people think it is, given the much higher rate of taxes you pay if you’re single, and the people you have to support if you’re married and have kids. About the only difference is probably the amount that gets put away for retirement.
Comment from Money Mentor
Time: January 7, 2009, 7:55 am
It’s interesting to see that executives are actually having to take a cut. Usually they’re always trying to find a way to cut other employees salaries so they can keep their beautiful bonuses. They’ll be alright as long as they’ve been putting money aside over the years.
Wait what am I saying?? They probably haven’t. 
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