This website has already posted a number of articles about how student debt borrowers and the population at large have been impacted by COVID-19. Indeed, many people have been laid off or furloughed, and this has impacted their ability to pay off student debt and cover their living expenses. Many people have also had their income decreased because of the ongoing pandemic, and dealing with salary cuts because of COVID-19 can be easier if you keep a few things in mind.
Many businesses, including law firms, are trying to implement salary cuts instead of terminations or furloughs in order to deal with economic issues because of COVID-19. It is thought that closures caused by the ongoing pandemic will be temporary, and businesses want employees to be on their payroll when the economy recovers. However, dealing with salary cuts because of COVID-19 can be tricky in a variety of circumstances.
Based on articles posted online, the amount of salary cuts because of COVID-19 vary from industry to industry. It seems like many companies are implementing salary cuts of 10% to 20% of an employee’s total income, and some companies have been forced to implement up to 50% salary cuts for some workers. Of course, dealing with salary cuts because of COVID-19 is much more difficult for people who face larger cuts, but everyone in this situation can implement some strategies.
The good things about facing salary cuts instead of furloughs or layoffs is that you should be more able to earn extra money through side-hustles. If you are laid off or furloughed, you should file for unemployment benefits, especially since benefits have been bolstered in the current environment. However, earning extra income from part-time jobs can impact the amount of unemployment benefits to which you are entitled.
Nevertheless, individuals who have merely had their salary reduced should be free to pursue side-hustles. This website has already posted dozens of articles about how individuals can earn extra money from home. I don’t want to repeat the information found in prior articles here, but suffice it to say that there are a variety of ways you can earn extra cash to make dealing with salary cuts because of COVID-19 a little easier.
Saving money might be an easier way to bridge the gap when dealing with salary cuts because of COVID-19. Since many stores are closed right now, and people are not heading out to bars and restaurants in the current environment, it is easy to save some amount of money during the ongoing pandemic. However, if this is not enough to bridge the gap that a salary cut may cause, individuals should consider some of the strategies mentioned in a prior article, including cooking their own meals, sticking to flat-rate streaming services for entertainment, and other tactics.
One saving strategy that individuals should consider with caution is to suspend payments to retirement accounts. Some people have told me that since employers are suspending 401(k) matches, and it is difficult to make ends meet with salary cuts, they have suspended contributions to retirement accounts. This could be a bad move. Although markets are volatile, the stock market has recently presented extraordinary buying opportunities. In addition, it is important to continue buying now when the market is down to make up for earlier losses when the stock market crashed because of COVID-19. If you have no other choice, then of course, you should suspend retirement contributions. However, dealing with salary cuts from COVID-19 shouldn’t keep you from realizing buying opportunities in the current environment.
Many people might want to look for a new job while dealing with salary cuts because of COVID-19. Having your income reduced is a huge blow to morale, and could give employees reduced confidence in the company at which they work. In addition, some companies have been able to largely avoid cuts in a variety of industries, and it might seem like salary cuts due to the ongoing pandemic may be a good reason to look for different opportunities.
However, people should be cautious about looking for new jobs when dealing with unemployment because of COVID-19. It is difficult to determine the financial soundness of a new employer, and it might be important to stay at a job than to risk heading to a new employer that might need to make cuts in the future. Also, salary cuts are beginning to be introduced almost industry-wide in many fields, such as with the legal industry.
I am a contributor to Above the Law, a legal news website, and the blog has been posting stories for the past month about how law firms having seemingly taken cues from each other to introduce salary cuts to all parts of the legal private sector. If you think that you can avoid salary cuts at a new employer, you may be wrong. A new employer may later introduce salary cuts, and by leaving your original job, you might forfeit the goodwill you have built up with managers during the time you worked at your initial position.
In the end, there are certain strategies that can be pursued when dealing with salary cuts because of COVID-19. Anyone in this situation can take steps to earn extra cash and save money to help bridge their income gap. In addition, individuals facing salary cuts may be best served by remaining at their current jobs in order to ride out the uncertainties caused by the ongoing pandemic.