Would you take a pay cut to avoid a layoff? 1 in 3 people surveyed say ‘yes’

Despite a steady job market, there is increasing concern about job security over rising layoff announcements.

U.S. companies cut almost 20 million jobs in 2023, according to the Bureau of Labor Statistics, a 10% increase from the previous year.

A recent survey of about 1,250 employed Americans by Resume Builder found about a third would be willing to take a pay cut or demotion to avoid being laid off. If that option comes in the form or an “either/or” offer by the company, it is a choice the employer is letting the employee make voluntarily.

When companies make a decision to reduce their workforce, they have already done the cost-cutting math, and by the time an employee is informed they are losing their job, it is probably too late for compromise. But Stacie Haller, a career coach at Resume Builder, said there may be a way to beat the company to the punch.

“If you sense that it’s coming and you are having conversations with your manager and you have a good relationship, and your manager is kind of letting you know this could be coming, then it is a good proactive step to have that discussion,” she said.

Layoffs come with severance packages that can buy affected employees time to find another job. But those depend almost entirely on how long an employee has been with the company.

“With so many folks I am speaking to, when they are at companies for just for maybe a year or a few years and then get laid off, and they don’t have that kind of tenure to justify a larger severance, the packages aren’t going to be what you might want them to be,” Haller said.

Twenty percent of those surveyed said they could only maintain their current lifestyle after being laid off for about a week. A layoff may be seen as an opportunity for some. But probably not most.

“It is the older folks who have more of a cushion and are able to do that, yes. But if you have a young family and you don’t have a lot of cushion, and you get laid off and then have to pay for COBRA, which is very expensive, sometimes you’re better off taking a pay cut and keeping the benefits,” Haller said.

The biggest concerns employees have about losing their job unexpectedly include losing benefits and being able to pay the rent or mortgage.

Many survey responses indicated the lengths to which employees would go to retain their job in the face of cuts, with 76% willing to work weekends, 58% willing to take on less-preferable work and 48% saying they would avoid taking time off for the foreseeable future.

For companies planning impending layoffs, Haller said it should be thoughtfully done with affected employees in mind.

“I think in any situation, the company needs to be transparent. At least be honest for the reasons. There could be many reasons that are totally outside of those workers being affected. It helps to offer services or outplacement services, because honestly, sometimes those folks you might want back in your organization later once when you’re hiring again,” she said.

Of those employees surveyed who said they were willing to take a pay cut, the most common response was a cut in pay between 6% and 10%, with 1 in 12 surveyed willing to accept a cut of more than 20%.

Resume Builder’s full survey results, methodology and perspective on the answers is available online.