Life after a six-figure salary
With fewer jobs available, unemployed workers are taking any position they can find - even if it comes with a salary cut.
NEW YORK (CNNMoney.com) -- Happy new year and welcome to your new job. One that pays 30%, 50%, 70% less than your old one.
That's right: With more than three job seekers for every opening, more workers are having to take significant pay cuts to find employment.
"For people who have been laid off, this is obviously a buyer's market," said Ravin Jesuthasan, a managing principal at Towers Perrin. "We're seeing pay levels in new positions coming down."
In fact, 63% of unemployed workers said they would be willing to accept a job offer that pays less than their previous job, according to a recent survey conducted by the National Employment Law Project. Still, only 37% of respondents expressed high confidence in finding a job in the next four months despite being willing to make such a sacrifice.
Nearly 2 million jobs were lost in 2008 and economists say the unemployment rate, which stands at 6.7%, will continue to rise into 2010.
"People realize that this is a different environment, said Jeff Joerres, chairman and CEO of employment services firm Manpower. "People are more anxious and are willing to secure something even if it is less."
Shaun Chedister, 30, is one of those people. Chedister was laid off from his job at Washington Mutual at the end of last year. After eight months of actively looking for work to help support his wife and four children, he accepted an offer from Ernst & Young even though the new position as an executive administrator paid less than half of what he was making before.
"My unemployment had run out, and I had to get something," he explained.
But the adjustment to making $66,000 a year from $125,000 has been hard. "For the last four to five years I'd been making six figures," Chedister said. "My lifestyle had been at a certain level."
Now Chedister said he's looking for a more affordable home. Last week one of the family's cars was repossessed after he got behind on the payments.
"It could be worse," he said, I could still be unemployed."
Often the hardest part of accepting a pay cut is the change in lifestyle that goes along with it, says Manpower's Joerres. "When you recalibrate your earnings expectations that means you have to recalibrate your lifestyle as well."
And for those living paycheck to paycheck, that can mean having to move, sell possessions or give up everyday extravagances such as cable TV or phone service.
After Jarrod Posner, 34, was laid off from his $110,000-a-year job as a mortgage lender for D.R. Horton, he had to change careers to find employment. After months of looking he took a job as an enrollment counselor at the University of Phoenix - a position that paid $33,000.
"I was actually thankful because I was getting a job, but at the same time my wife and I realized we had to make a lot of lifestyle changes," Posner said.
Since then, the Posners, who have two children, foreclosed on their home, moved into a rental property, downgraded from two cars to one and learned how to budget, he said. They've also given up their telephone and cable TV package. "All the little luxuries we don't enjoy anymore," he said.
Despite the dramatic downsizing that came with a 70% salary reduction, "I'm kind of happy," Posner said. "It's nice to know that I have pretty steady employment."
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