The Horns of the Dilemma: Take a lower-paying job or go on unemployment and hope for the best?
April 6, 2010 8:02 AM Subscribe
The Horns of the Dilemma: Take a lower-paying job or go on unemployment and hope for the best? Read on...
Help me get through a dilemma, MeFi.
Last week, I was laid off from my software design / production job. It's OK; in this segment of the industry, it's been happening quite a bit. FWIW, I'm in the U.S.
I now have two options to consider.
Option A: I have a job offer in hand from a former colleague with a software start-up. This is a not your average start-up, as this person has been quite successful in the past and seems poised to once-again pull down seven figures for himself.
The work involved will be quite different than what I've done in the past -- where I was previously in media / video games, this is business-oriented software, and the job is more business development than plain-jane production (although that will be part of it, too). I have a great deal of trust in this colleague and this company's ability to be successful, so the long-term looks very lucrative for all involved. Still, no promises.
The problem is quite simply salary over the short-term (i.e. 6-9 months). As a start-up, they're offering me only about half of what I was making before, plus a pretty good commission on new business. No benefits, no health insurance for the first 9 months at least, although severance and COBRA can make up for the shortfall over the 6-9 month period.
But half my salary means my family and I will be barely scraping by on a month-to-month basis. I'm not counting commission because it's undefined and unlikely to start within the next 3 months. There will be significant household cutbacks.
Finally, speaking of promises ... as a start-up, he's wary of costs. I gave my colleague my word that I wouldn't use him as a safety net. There would be no contract involved, but if I jump in, I said, I would jump in with both feet, and not leave for greener pastures after an unreasonably brief period of time.
Option B: Go on unemployment and hit the bricks. Prior to the lay-off, I had been looking on a low-level, with no success. Now, I would obviously turn those efforts up to a boil. Unemployment will pay one-fourth of what I was making before, for six months. And of course, there's no promises. The last time I faced similar circumstances was spring 2008, before the recession hit, and it took me three months to find a job.
What's your advice, MeFi?
Help me get through a dilemma, MeFi.
Last week, I was laid off from my software design / production job. It's OK; in this segment of the industry, it's been happening quite a bit. FWIW, I'm in the U.S.
I now have two options to consider.
Option A: I have a job offer in hand from a former colleague with a software start-up. This is a not your average start-up, as this person has been quite successful in the past and seems poised to once-again pull down seven figures for himself.
The work involved will be quite different than what I've done in the past -- where I was previously in media / video games, this is business-oriented software, and the job is more business development than plain-jane production (although that will be part of it, too). I have a great deal of trust in this colleague and this company's ability to be successful, so the long-term looks very lucrative for all involved. Still, no promises.
The problem is quite simply salary over the short-term (i.e. 6-9 months). As a start-up, they're offering me only about half of what I was making before, plus a pretty good commission on new business. No benefits, no health insurance for the first 9 months at least, although severance and COBRA can make up for the shortfall over the 6-9 month period.
But half my salary means my family and I will be barely scraping by on a month-to-month basis. I'm not counting commission because it's undefined and unlikely to start within the next 3 months. There will be significant household cutbacks.
Finally, speaking of promises ... as a start-up, he's wary of costs. I gave my colleague my word that I wouldn't use him as a safety net. There would be no contract involved, but if I jump in, I said, I would jump in with both feet, and not leave for greener pastures after an unreasonably brief period of time.
Option B: Go on unemployment and hit the bricks. Prior to the lay-off, I had been looking on a low-level, with no success. Now, I would obviously turn those efforts up to a boil. Unemployment will pay one-fourth of what I was making before, for six months. And of course, there's no promises. The last time I faced similar circumstances was spring 2008, before the recession hit, and it took me three months to find a job.
What's your advice, MeFi?
Best answer: Bird in the hand, by all means.
posted by tilde at 8:08 AM on April 6, 2010 [1 favorite]
posted by tilde at 8:08 AM on April 6, 2010 [1 favorite]
Best answer: Take the job in hand. It sounds like a great opportunity and probably pays more than unemployment. If you later need to bail, bail - your boss doesn't buy your servitude at half your market rate.
posted by yarly at 8:10 AM on April 6, 2010 [2 favorites]
posted by yarly at 8:10 AM on April 6, 2010 [2 favorites]
Best answer: Take the solid job.
Make friends with potatoes by the bag, frozen vegetables, cheap whole chickens and the library. Cancel cable. You will survive and have new recipes.
posted by terpia at 8:12 AM on April 6, 2010 [2 favorites]
Make friends with potatoes by the bag, frozen vegetables, cheap whole chickens and the library. Cancel cable. You will survive and have new recipes.
posted by terpia at 8:12 AM on April 6, 2010 [2 favorites]
So in reality the fact that its half the salary you were making before... is no longer relevant.
This leaves 2 choices.
1. Take job and make X, and lock into that for a significant period of time.
2. Take Unemployment and make Y and look for another job.
Here's the thing we don't know. Is there a significant difference in money between X and Y. If its not a significant difference then option 2 sounds like it may be a better choice.
posted by bitdamaged at 8:14 AM on April 6, 2010
This leaves 2 choices.
1. Take job and make X, and lock into that for a significant period of time.
2. Take Unemployment and make Y and look for another job.
Here's the thing we don't know. Is there a significant difference in money between X and Y. If its not a significant difference then option 2 sounds like it may be a better choice.
posted by bitdamaged at 8:14 AM on April 6, 2010
My view has always been that unemployment benefits are to be used for when there is truly and absolutely no work to be found. However, I'm a single person without a family so YMMV.
I'm sorry you're in this position -- I hope everything works out for you. Good luck.
posted by hapax_legomenon at 8:16 AM on April 6, 2010
I'm sorry you're in this position -- I hope everything works out for you. Good luck.
posted by hapax_legomenon at 8:16 AM on April 6, 2010
This is a bit cheeky, but could you go on unemployment and work for your friend on a voluntary basis until the company takes off, then get a dividend or something.
posted by Not Supplied at 8:17 AM on April 6, 2010
posted by Not Supplied at 8:17 AM on April 6, 2010
Response by poster: Here's the thing we don't know. Is there a significant difference in money between X and Y?
Leaving commission aside, X (new job) is twice as big as Y (unemployment), and Y is for only six months.
posted by Cool Papa Bell at 8:19 AM on April 6, 2010
Leaving commission aside, X (new job) is twice as big as Y (unemployment), and Y is for only six months.
posted by Cool Papa Bell at 8:19 AM on April 6, 2010
How is it that unemployment is only paying 1/4 of your previous salary? Have you filed yet and found this out? I know it varies from state to state, but here in MA you get 1/2 of your salary (averaged over the four previous quarters to when you were laid off) plus a federal $25 extra a week and $25 per child extra. Bonuses are included in the calculation, which increased my unemployment a good amount (my pay was low, but my bonuses were nearly 10% of my pay). As a result, I'm making more like 2/3 my regular weekly pay - enough to not have to take a horrific pay cut and acquiesce to the companies who laid people off at $20 an hour 6 months ago and are now hiring for the same positions at $12.
I would file first and get the letter that shows your weekly unemployment compensation before making the decision. Like Not Supplied said, if the new business crashes your unemployment would be reduced further. I don't think the extra $25 was in place when you last had to file, so maybe there are other changes as well you haven't taken into consideration. Of course, if you've done that already, my point is moot.
posted by kpht at 8:28 AM on April 6, 2010
I would file first and get the letter that shows your weekly unemployment compensation before making the decision. Like Not Supplied said, if the new business crashes your unemployment would be reduced further. I don't think the extra $25 was in place when you last had to file, so maybe there are other changes as well you haven't taken into consideration. Of course, if you've done that already, my point is moot.
posted by kpht at 8:28 AM on April 6, 2010
kpht: the maximum weekly unemployment allowance differs by state. Some states haven't upped theirs in a while - in Georgia, it's $277 after taxes, and many people get less than that.
posted by catlet at 8:32 AM on April 6, 2010
posted by catlet at 8:32 AM on April 6, 2010
That makes sense, catlet. Ouch! In that case, I'd go for the job. For sure.
posted by kpht at 8:36 AM on April 6, 2010
posted by kpht at 8:36 AM on April 6, 2010
I think you should file for unemployment and ask them about self-employment. If you worked for this guy, you would be self-employed. (Don't forget to save for taxes, 30-45% of your take-home.)
Why would there be no contract? You can have a contract which states the kind of work you'll be doing and for how much and also have it end at any time. Your contract could be month-to-month where you are paid a set amount each month and the contract is renewed monthly for six months with the same terms.
I hope you're planning to negotiate your salary with this guy. You don't have to take his first offer. You should consider what you need to make ends meet. Sounds like that's a bit more than he's offering. Ask for it. And plan to get very involved in his numbers if you do work for him so that after 6 months and the contract is up you can renegotiate.
Your employment department will tell you about self-employment and how that works. Tell them that you have a six month contract on the table and you wonder how that would affect your benefits. Tell them roughly the amount you would be making over those months and find out if that would affect your benefit payments.
posted by amanda at 8:51 AM on April 6, 2010
Why would there be no contract? You can have a contract which states the kind of work you'll be doing and for how much and also have it end at any time. Your contract could be month-to-month where you are paid a set amount each month and the contract is renewed monthly for six months with the same terms.
I hope you're planning to negotiate your salary with this guy. You don't have to take his first offer. You should consider what you need to make ends meet. Sounds like that's a bit more than he's offering. Ask for it. And plan to get very involved in his numbers if you do work for him so that after 6 months and the contract is up you can renegotiate.
Your employment department will tell you about self-employment and how that works. Tell them that you have a six month contract on the table and you wonder how that would affect your benefits. Tell them roughly the amount you would be making over those months and find out if that would affect your benefit payments.
posted by amanda at 8:51 AM on April 6, 2010
As someone who is in business development for a business orientated software start up, I'll tell you right now to take whatever they project for incoming sales and assume it will take 3X as long to actually happen. You simply have to assume that commission will be zero to negligible over the next year. The sales cycle for business software runs anywhere from 3-18 months depending in the size of the investment required by the customer, and the magnitude and pain of the change involved. It takes quite a while to get businesses of any size to make a decision to change existing systems and buy something new, even in a good economy. In this economy, it's downright painful at times.
Also, COBRA for a family can be freaking ridiculously expensive. Maybe you can get him to cover the cost of that? Maybe the start up is short on cash or under-capitalized, or maybe this guy gets rich by underpaying everybody that works for him. But I thought we all learned our lessons about foregoing upfront pay for the promises of option laden riches later? That almost never works out. I realize this isn't you shooting for the stars, it's you trying to pay the mortgage next month, so it's not the same "stupid" decision I made a couple of times over the last 10 years.
In my book, your 1st, 2nd, and 3rd responsibilities are to your family. If that means taking the start up job to scrape by while you continue to look for something better, so be it. The company, even as a start up, won't hesitate to ditch you if circumstances dictate it, so I don't see that you own them any extra loyalty upfront. Do what you have to to take care of your family. And Good Luck!
If you are in the DC area and do C# development feel free to send me your resume. I've heard talk around the office of us maybe needing another developer soon...
posted by COD at 9:28 AM on April 6, 2010 [3 favorites]
Also, COBRA for a family can be freaking ridiculously expensive. Maybe you can get him to cover the cost of that? Maybe the start up is short on cash or under-capitalized, or maybe this guy gets rich by underpaying everybody that works for him. But I thought we all learned our lessons about foregoing upfront pay for the promises of option laden riches later? That almost never works out. I realize this isn't you shooting for the stars, it's you trying to pay the mortgage next month, so it's not the same "stupid" decision I made a couple of times over the last 10 years.
In my book, your 1st, 2nd, and 3rd responsibilities are to your family. If that means taking the start up job to scrape by while you continue to look for something better, so be it. The company, even as a start up, won't hesitate to ditch you if circumstances dictate it, so I don't see that you own them any extra loyalty upfront. Do what you have to to take care of your family. And Good Luck!
If you are in the DC area and do C# development feel free to send me your resume. I've heard talk around the office of us maybe needing another developer soon...
posted by COD at 9:28 AM on April 6, 2010 [3 favorites]
If the job is paying twice as much as unemployment then in that case my advice is to take the job.
posted by bitdamaged at 9:44 AM on April 6, 2010 [1 favorite]
posted by bitdamaged at 9:44 AM on April 6, 2010 [1 favorite]
I'd take the job. If anything, maybe you'll learn something new or improve your skillsets to make yourself look more attractive to employers when this gig is up.
posted by spinifex23 at 11:12 AM on April 6, 2010
posted by spinifex23 at 11:12 AM on April 6, 2010
No contract seems unusual. He's asking you to work at below market wage with the opportunity to get more money later, but is unwilling to write down the terms? That sounds risky. You are entirely dependent on the good graces of your boss which is no way to run a business. Get it in writing. It should specify the percentage for commissions or profit-sharing in some manner. If profits don't materialize within some reasonable time, you should feel free to bail. You owe him no promise to continue working at below market wages if a better offer comes along at any time. Think of it as an offer of vesting. If you stay, you become vested. If you leave early you do not, but it is always your choice whether to stay or leave.
posted by JackFlash at 11:39 AM on April 6, 2010
posted by JackFlash at 11:39 AM on April 6, 2010
Response by poster: He's asking you to work at below market wage with the opportunity to get more money later, but is unwilling to write down the terms? That sounds risky.
Oh no, the terms are all up front, sorry. When I said no contract, I meant there would be no employment contract that would tie me there, legally or financially, for an extended period. It would just be straight-up, at-will employment, like any other typical job.
posted by Cool Papa Bell at 12:49 PM on April 6, 2010
Oh no, the terms are all up front, sorry. When I said no contract, I meant there would be no employment contract that would tie me there, legally or financially, for an extended period. It would just be straight-up, at-will employment, like any other typical job.
posted by Cool Papa Bell at 12:49 PM on April 6, 2010
Best answer: Think of it as a two-way street. His finances will be low, and yours will be too. If he can't make ends meet, he wouldn't hesitate to cut some people from his team to stay afloat. By the same token, if you're struggling and you come across another job that will dramatically raise your salary, it's only the smart thing to do financially to leave. Don't get too hung up on the non-contractual promise you made to stick it through. "It's just business" / it's your family's financial stability.
posted by naju at 3:03 PM on April 6, 2010 [1 favorite]
posted by naju at 3:03 PM on April 6, 2010 [1 favorite]
How soon do you have to make a decision re: your former colleague? Can you talk with him about taking a set, short period of time to explore your options so that you have a better idea of what's out there, and then have an answer for him?
posted by EmilyClimbs at 5:16 PM on April 6, 2010
posted by EmilyClimbs at 5:16 PM on April 6, 2010
Response by poster: Hey, thanks everyone for their thoughts. I took the job, but worked out a different salary review schedule, and kept other irons in the virtual fire. I marked the answers that really resonated for me.
posted by Cool Papa Bell at 4:43 PM on April 7, 2010
posted by Cool Papa Bell at 4:43 PM on April 7, 2010
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Sorry. :(
posted by MexicanYenta at 8:07 AM on April 6, 2010