Would you take a pay-cut to get a higher position?

Question

Say you're in a contracting developer role at a bank that pays well and will probably be extended.

Then you get offered a permanent role at an IT solution provider as a Senior Developer/Technical Lead.

Would you stick with the contracting, or go to the permanent role?

The contract role:

• pays well
• will probably be extended
• provides finance industry experience
• is reasonably challenging, although I don't get much ownership over the projects

The permanent role:

• pays less
• gives me technical lead/team lead experience-
• involves a range of websites for different clients, and I get to take ownership of projects
• much more challenging technically, as I have to "earn my stripes" within the team before I'll be given team lead responsibilities.

If you were in this situation, would you take the pay-cut and go with the permanent role? Or would you continue contracting, and not feel like you might have missed out on something really good?

Answer 1

In the current job market, I'd take the more secure position (assuming the salary is at least reasonable). Long-term employment at a slightly lower wage trumps short-term employment if you might wind up unemployed in a year or so.

Permanent positions tend to be more conducive to internal promotions, as well - do well and you won't be making less for too long.

Answer 2

Assuming that right now you're not in dire need of the extra cash, I'd recommend you to go for the team lead role. Even if things don't work out, you will have learnt a lot and you can most likely switch back to contracting. That is unless the job disappears because of the crisis, but regardless - any kind of banking jobs may be under threat.

Answer 3

If you're going to go for the permanent position, just make sure that its a company worth staying with, and that you'll stay there for a reasonable length of time (e.g., at least a year or two) to "reap the fruits" on that investment; otherwise it will look no different in your resume than a temporary consulting gig.

Answer 4

Have you taken into account the hidden payments a permanent position provides:

1. Medical/Health
2. Pension Matching
3. Payed Vacation
4. Payed Sick Time
5. Life Insurance

Answer 5

I would evaluate my growth options at current position. I'd stay with current job if:

• I like the job
• I like the people
• There's room to grow
• The company is in good business
• The company offers substantial benefits

I'd leave for another job EVEN WITH a pay cut if:

• There is something to learn and/or it interests me
• I've evaluated and found it likable (bullet points from above)
• It's closer, in nicer neighborhood, or has better work setting
• The company offers substantial benefits
• The management seems to care about its employees
• The management has an IT/CS background

Overall, in career it's not possible to always have it your way (except when you're working for Burger King, of course). Sometimes you have to lose a little to gain a lot. I guess it's a lot like gambling.

Answer 6

Unless I was planning on sticking around for years and years in the permanent role (not likely), I'd stick with the higher paying contract role. But I'm young and stupid, not to mention greedy.

Answer 7

I'm not sure what the situation is like in the US, especially given all that has happened over the past few months, but in Australia the job market for developers has been pretty good, so a lot of people have done well in high-paying contract positions. When the job market cools though it might be better to switch to a more secure, career-building, permanent position. Bear in mind, even though it looks like the economy is heading for some rough times, I think skilled IT professionals will still be in comparatively high demand for the foreseeable future. Middle-management layers can be hit hardest when the economy takes a downturn.

Answer 8

Only money pays the bills, last I checked. I cant pay my bills with a title or thank you's or ownership of projects, etc.

I would stick it out with the contracting job, bank as much of the pay as you can, take the extension and I would be willing to be that the offer of a permanent job, there, for you, will follow you as you sound like you're well regarded at the client.

If not, and your work at the client ends, you will hopefully have banked enough to weather some downtime, maybe start your own business or line up the next client. I dont suspect you'll be down long.

Answer 9

Assuming that both pay a reasonable wage that I could be comfortable on (and I suspect you wouldn't be asking the question if that wasn't the case) then, for me, it comes down to two really important factors:

1. Will I be challenged and learning new skills? You need to feel like you're moving forward and growing personally.
2. What are the team and the management like? You need to be in a supportive environment and not hate going in every day. I've turned down better paid jobs in the past because of the company politics and individuals in the company.

Answer 10

You say "pay cut" - how much?

You really have to weight the pros and cons (as many have pointed out) generally you make less in a permenant position because of the intangibles the position would provide - namely, insurance, job security, 401k, a "home" so to speak.

Some people value this kind of security more than a higher paycheck/freedom to end up on the streets/travel at their whim, change careers/directions at the end of a contract.

I'd sit down, list the pros and cons, and make the decision.

Answer 11

Yes... depending.

It really matters how much you're earning now versus how much you would be earning at the lower paying job.

Also what is the earning potential of each path? If there's more growth and you'll be happier on the lesser paying one then I think that's a no-brainer if you can afford the pay cut right now.

Another option that I've done in the past is to stay at your current job for a bit longer (a year or so if possible) all the while focusing on trying to improve the core skillset you would need in the lower paying job. At the end of that year you might be able to get a comparable job and not take a pay cut at all (or at least not as large of one).

Answer 12

Changing jobs is always has a risk element attached, you never know what the future holds. I switched jobs to get back into full time software development again back in 2001 with a well respected MS Gold Partner. I took a fairly substantial salary cut to do so, 18 months later I was holding my P45 and standing in a queue at the Job Centre simply because of a downturn in the IT business.

In the long run I have no regrets about what happened because I used the 18 months I was there to soak up every bit of knowledge I could about building robust software. I've now been with my current employer (after a couple of other less interesting roles in between) for over five years, it pays well and it's technically challenging and a lot of fun.

Life can be full of surpises.

Answer 13

Personally, I'd go for the permanent position, but that's my preference. In the past, I've taken pay cuts when transferring jobs, but always made it back to or higher than the original salary before the end of the first year.

My criteria is how much the new job interests/engages me. Will I be getting new experience, more responsibility, etc.

Regarding contracting vs. permanent, I'd have to say that at the moment I'd opt for a secure job for the next year or so at least.

Also, as a contractor you're solely responsible for your career progression. Training is taken at your own expense and on your own time, but you have full discretion on which direction you want to go. As a permanent employee, it's a shared responsibility, you don't get as much choice in the direction, but mainly the employee pays (at least partially) for training and it's conducted on work time (i.e. you get paid to be trained). It depends on how you feel, which side this weighs in, do you want help in your training or do you want control over it?

I'm based in Ireland and I've seen, in the last 2-3 years, a swing from the contractors having the power to the employers. At the start of the decade, contractors here were deciding how much they would accept, and employers had to live with that. Contract rates rose about 15-25% a year from 2000 until about 2004 (for the same roles we were paying about €60 an hour in 2001, we paid €100 to €140 an hour in 2004/5). After that they stabilised, then fell. I seen the employers getting nasty with contractors after this point (to the point of penalising them if there was too many short contracts on their CV even if they were transferring to a permanent role).

I'm not saying that's how things will go in the States, just that this is how it panned out here.