Last year was nothing less than a nightmare. As the COVID-19 pandemic gripped the world, businesses resorted to layoffs and pay cuts. Even as the economies are slowly crawling back to normalcy, workers are still being haunted by low pay and job uncertainty.
According to a recent findingOpens a new window by beqom, only 51% of US workers felt comfortable discussing pay with their direct managers during the pandemic. Out of those who did not, 37% said that they were grateful just to have a job and 25% were worried that such a discussion would impact their employment status.
Inequality Creeps In
What is more worrying is that there is a gender gap here as well. 62% of men felt comfortable speaking to their managers on the issue, compared to 44% women. This information comes at a time when the average gender pay gap in the country is around 18.9%, as stated by the US Census BureauOpens a new window .
Similarly, an age gap also exists. Baby Boomers are more likely to have a conversation on the subject, compared to Generation Z. Here are a few crucial observations from the study:
- It is the employees, especially younger ones, who bore the brunt of the pay cuts. Only 24% of employees said their CEO or executive leadership team let go of their salary.
- 55% of workers were likely to take a pay cut to avoid being furloughed or let go. However, less than half would let go of their salary to save colleagues from being furloughed.
- Child care and the pandemic has become a dangerous concoction for working parents. While 47% of them were forced to take pay cuts as they had to cut down working hours, nearly two in five considered leaving their jobs. Also, nearly half feel they will lose out on promotion due to the additional responsibility at their household.
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How To Tide Over Pay Cuts
- Create a new budget by cutting down all non-essential items. Make sure your total expenses are less than or equal to the money you are earning. Another way of doing it is to categorize your spending into â€œneedâ€ and â€œwantâ€. For instance, rent money is what you need but Netflix subscription is what you want.
- Make your investment plans carefully. You must look at your short- term goals and align your investment to that.
- If you are tempted to take new loans to tide over the difficult time, think again as they could spell trouble afterwards. If you already have loans and you are struggling to pay EMI, opt for a moratorium.
- Try to keep away from savings and retirement plan even though it may seem extremely lucrative to have liquid cash in hand. Try and contribute a little to these money pools even when the situation is dire.
- Always have a backup plan, especially if you think that the sword of pay cut or lay off is hanging above you. Look for other sources of income. If you are staying with family, you can also ask some of them, like your spouse, to contribute.
- Apply for unemployment benefitsOpens a new window , which have been extended by up to 13 weeks by the Families First Coronavirus Response Act. There are other assistancesOpens a new window , like utility bills, student loans, and mortgage or rent, available. Check your eligibility for these.
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With the vaccine rollout and the slow but steady recovery of the economy, we can expect the situation to get better. However, salary cuts are not going to vanish overnight. Roughly 1 out of 3 full-time workers have faced a pay cut, a MagnifyMoneyOpens a new window survey report says.
Unfortunately, it is women who are suffering more as their job setbacks, including pay cuts, are taking longer to recover than their male counterparts. So, hang in there until the situation gets better. It is easier said than done but it is important to stay hopeful.