I am getting “promoted”, but also getting a “pay-cut”
Posted by Frugal on January 8th, 2009
Times are really bad, and unfortunately it’s just going to get worse going forward for most people.
I just got unofficially promoted, managing a team of six engineers as a project leader. But the CEO of my company has come out and said that there is no salary raise for anyone this year. And he is also cutting discretionary spending which includes subsidized cafe food, drinks, and also all internet home access. Now I will need to pay my own high-speed internet access, which will amounts to about $40 * 12 = $480, and if paying out of after-tax money at a marginal tax bracket of 28%+9.6% = 37.6%, $480 will be $770 “pay cut” a year.
But I’m grateful to just hang on to my job. I’ve heard horror stories of up-to 60% layoff in my industry lately. And layoffs will be coming in every industry and pretty much every company this year. The vicious cycles are going to continue into 2010 in the form of unemployments triggering a reduction in consumption and more home foreclosures (which mean more bad loans, more REOs, and less credit availability). Now is the time to build up your rainy day funds if you don’t have any. Don’t take any more vacation days off, since you may very likely need them as part of your “rainy days”.
This economic downturn is truly going to be the worst experience that we will all remember as a generation. Good luck to those who are graduating, since only the top students may get some decent jobs. Best luck to everybody.
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January 8th, 2009 at 9:59 pm
That sucks. Be thankful that you still have a job, but take notice and make sure you are doing everything to make yourself desirable to employers.
January 9th, 2009 at 8:40 pm
Especially for the college graduates, now is the best time for people to realize that a job is not the most secure option you have. Figure out how doing what you love can make you money, and do it often. Don’t cling to a job like your entire self worth is attached to it. Peace.
January 10th, 2009 at 1:19 am
Congratulations on your raise. Wow- on a way to be a millionaire as an Engineer and now a Manager. I’m a CEO of a small company and just achieved a net worth of a millionaire… mostly through salary savings.
Well done, and good luck. Do well and keep performing.
-Mike H.
January 10th, 2009 at 1:19 am
Congratulations on your promotion. Wow- on a way to be a millionaire as an Engineer and now a Manager. I’m a CEO of a small company and just achieved a net worth of a millionaire… mostly through salary savings.
Well done, and good luck. Do well and keep performing.
-Mike H.
January 10th, 2009 at 1:19 am
Congratulations on your promotion. Wow- on a way to be a millionaire as an Engineer and now a Manager. I’m a CEO of a small company and just achieved a net worth of a millionaire… mostly through salary savings.
Well done, and good luck. Do well and keep performing.
-Mike H.
January 10th, 2009 at 11:54 pm
Just be careful to not set the precedent that you’ll work harder for less. I did this at a previous job, and even after times got better – new people brought in were making near or more what I was just to bring them in while I got “standard raises.”
Either way best of luck and congrats on the promotion.
-Bill
January 12th, 2009 at 10:35 pm
Well if its any consolation what is happening to you is happening to millions. Thats part of the recovery during recessions. People learn to do more with less, they consume less, save more, challenge business to deliver value added products which uplifts all of society. I don’t fear recessions. Recessions cleans out the excesses, seperates the wheat from the chaffe and results in s bonifide recovery if allowed to run its course.
If your salary stayed the same, you now can buy more gas than you could a year ago, industrial metals, stocks, real estate etc. Your actually richer salary wise in a deflationary environment. The people getting thumped in this recessionary phase are borrowers who see their earnings static if not declining if not extinct while their bills stay the same, frozen at the pre-deflationary period.
Now I know nobody wants to lose their jobs and during severe, prolonged recessions ie. depressions, there is a temporary period where nobody knows what direction the economy needs to take and during this period people save like crazy (10,15,20 percent) which sets the stage for a massive recovery later on as malinvestments are liquidated, strong hands take assets from the weak for pennies on the dollar and people pull their collective heads out of the a$$e$.
Companies come out leaner,meaner and smarter. People are more thrifty, hopefully community involved and instilled with what I call “traditional values” which have gotten a bad rap as of late due to the prevailing “progressive wisdom” which still has milk on its whiskers. Traditional values weren’t adopted due to their overwhelming warm and fuzzines, but because they work, they are tried and true.
So I don’t fear recessions. I’m a saver, frugal and hardworking with an eye for constant efficiency and innovation (which gets no respect in the boom times) but becomes revered in times like these. I have simple needs Family, friends, community and a good book are all I need for entertainment.
Maybe its time to slow down, take inventory on whats really important and rebuild this society on a foundation of true value and true values.
January 13th, 2009 at 7:25 pm
What are the horror stories on layoffs ? Most tech companies have hiring freezes. But they have little in the way of job cuts.
January 15th, 2009 at 9:23 am
Sounds goofy to me. Seems to me that a new position of higher responsibility, etc., should come with a higher salary, not a raise. There is a difference between a raise and a higher salary.
as far as cutting discretionary spending like internet at home, then so too does discretionary work from home.
March 17th, 2009 at 10:56 pm
I think you should be happy that the cut was only the internet. I’ve heard instances where people had to take 10-15% paycut on top of loosing all benefits like broadband, mobile etc