Does The COVID-19 Job Market Mean That You Have To Take a Pay Cut?

Pay cut

It’s always nerve-wracking when a recruiter asks what salary you are looking for. If you ask for too much, you may put yourself out of consideration. If you ask for too little, you may be leaving money on the table.

This question is particularly relevant during this time of economic uncertainty because of COVID-19.

As of yet, it is hard to measure the impact of high unemployment and slow economic growth on the salaries people get for their new jobs.

When answering the dreaded question, it is always best to say a salary range, rather than a specific number. “I am looking for the low $100s,” or “I am looking for the high $60s.” That leaves lots of room for negotiations.

Back when I was a recruiter for 3+ years at Robert Half, I placed countless people in finance and accounting jobs. I noticed there was a correlation between the salary and the level of work the person needed do. It was a pattern!


Job vs Career workbook

I will use a salary of $100K for illustration:

  • $120K    20% from base pay
  • $110K    10% increase from base pay
  • $100K    Base pay as an example
  • $90K      10% decrease from base pay
  • $80K      20% decrease from base pay
  • If you are at $100K, a 20% increase to $120K will be significant. This pay could mean that you have worked for a long time with one company, but your pay did not increase to market rate over time. Or it really could mean that you are under-qualified to do the work.
  • If you are at $100K, a 10% increase to $110 will be noticeable in take-home pay. You might be able to afford that coffee at Starbucks as a discretionary expense.  
  • If you are at $100K, a 10% decrease to $90K will also be noticeable in take-home pay. You might need to cut back on discretionary expenses.
  • A 20% cut down to $80K will dramatically lower your standard of living. Even if you are happy with a new job, the lack of pay might eventually drive you to look for a different one with a higher salary. Plus, it might be that you are over-qualified for the job.  

If you receive an offer after a successful interview, compare it to your current (or last) salary. Leave out other factors such as healthcare, and think about after-tax dollars. Where does the offer fit into the 10% – 20% rule? This will give you an idea of if you should accept the job.

Of course, this strategy is just one way to measure if you should accept an offer. I have 20 years of experience helping people get new jobs, so I have a lot of training and experience in salary negotiations. If you’d like a free consultation, please book one on my website. It would be my pleasure to help you get the most money possible in your new position!