Taking a Pay Cut Could Make You Happier
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Here's your money briefing for Tuesday, March 26. I'm Arianna Aspuru for The Wall Street Journal, filling in for J.R. Whalen. Whether or not you believe the phrase, more money, more problems, our paychecks have a huge impact on our lives. But some people are choosing to take a pay cut.
There was a way in which they could cut back some of their professional responsibilities, some of the stress of their jobs, some of being on call at all hours, and instead getting more free time, more time with their family, and really saying that they were happier because of it.
We'll talk to WSJ reporter Joe Pinsker after the break.
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Taking a pay cut can be a risky decision for your finances. But some people say they're happier because of it. WSJ reporter Joe Pinsker has been looking at the intersection of what we get paid and our happiness. And he joins me. So, Joe, what's leading to some people taking hits to their pay?
What is the podcast episode about and who is hosting it?
Many people take a pay cut involuntarily, sometimes because they were laid off or because their employer puts it on them. But there are a number of people who decide to take a pay cut by switching to a different type of job. And it's often because they're looking to optimize for other things like work-life balance or time with their family.
And why has pay become something that's a little less important to some workers?
I guess I'd almost put it as not pay becoming less important, but almost work in general. Over the past couple of years, we've seen the pandemic sort of reshuffle Americans' attitudes towards work to the point where It's less central to their lives and to their identities. And so it's not that people want less money in their bank account. It's that they are thinking about this tradeoff between, well, maybe if I went down a bit in money, I could go up in some other categories. And I think that's a tradeoff that more people lately have been willing to make.
And in your story, you mentioned also the fact that the actual work that people are doing is a little bit more important to this decision. Now, interesting work and work that kind of excites them, even though it might pay a little less, they're looking more to do that.
Yeah, a surprising number of people say that when they switch jobs and their pay goes down, their new job is actually better. That percentage is 40% of people. And if you look at the actual variables or characteristics of a job that make people like it more or less, when a new job has higher pay, that's actually less likely for people to say that it's better than when they're more interested in the work. Becoming more interested in the work is a better predictor of whether someone's going to like a new job. than if they have higher pay.
And you spoke to some of these people who took that new job with lower pay. Why did they do it?
One of the answers that just kept coming up over and over as I was talking to people about this is time. Money and time is a classic trade-off.
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