Preference: Layoff risk or Certain Paycut?

[Angio333]

If you take the paycut, what are the chances of getting laid off a a month or two later no matter what?

[project15]

Looks like this just happened to a local Chicago company - Acco. The employees voted on the paycut rather than a reduction in force. They are taking a temporary (one month) paycut of 50% and then it will go up to only a 20% paycut after that.

[Scanner]

If you take the paycut, what are the chances of getting laid off a a month or two later no matter what?

In life there are no guarantees but in this fictional scenario, you would think the "finance" dept would be crunching numbers to see what would possibily avoid layoffs.

If wages move downward, the chances of further layoffs would be reduced. That is the whole point of the choice - either cut back the workforce or cut wages.

[anonymous_saver]

I definitely chose the possibility of layoff.

On a personal level, I have enough in savings that would last me quite awhile, and I have temp and restaurant experience so I would be willing to work those jobs if necessary, and I live close to family. I am lucky, I could make it for awhile without a job. I would rather me have a chance at a layoff, rather than someone else get a 20% paycut who can't afford it.

[carlsguide]

Times are tough right now. If you need the money then take a pay cut and be thankful for a job.

[ksluis62]

I'd go with the chance of layoff, with the same pay. I'm in an industry (computer systems consulting & software development), where telecommuting is increasingly an option. So if I can't find a job locally, there's a reasonable chance I can find a job elsewhere, and not have to move the family.

[disneysteve]

Originally Posted by Scanner

If I had a prediction, I would have thought 80-90% would have taken the "safer" route and opted for a paycut.

You need to keep in mind that a great many people (including folks here, though in smaller numbers) live paycheck to paycheck. A 20% pay cut would be devastating. Even most folks who aren't living paycheck to paycheck couldn't handle a 20% drop in income. They'd rather take the 90% chance that they get to keep their job instead of the 100% certainty that they'd be unable to pay their bills.

[Scanner]

Disneysteve,

Good point. . .also. . .I am surprised not many people voiced this (this wouldn't reflect in the poll raw numbers but is rather qualitatitive) but my wife would vote 20% paycut so she didn't have to see her co-workers, who she has some amount of affection for, lose their jobs.

So. . .I wanted to see how much it was about you or the "collective." ( I guess this is an unaffectionate bunch, LOL )

I think the poll also indicates by it being higher than I predicted that people tend to think of themselves (no judgment - as Maat notes, the employer is thinking of themselves in this capitalistic world).

Again, I still remain surprised.

And yes, a 20% paycut is uncomfortable but not unworkable. If you are making $1000/week and you drop to $800/week, okay you are perhaps dipping into savings of $200/week (if you live paycheck to paycheck and won't cut cable, phone, internet, recreation). However, lose your job entirely and you are dipping into your EF $1000/week (minus unemployment). . .which do you think will run out quicker?