Why do you want to quit your job? There could be many reasons for that including, but not limited to: another great gig, big money, promotion, relocation desires, or just plain management issues. The old saying that “Employees don’t quit their jobs, they quit their bosses” has never been more true.
There are many factors that go into a decision like this. As times seem to be getting better, and the job landscape is looking more inviting than ever, there are other reasons to really think about whether to leave your current position.
If you already have a good gig lined up, go for it. Nobody is ever ‘mandated’ to stay in a job (unless you work for a family business, then personal and familial obligations often take precedence). A formal job offer, in writing, is what is needed to take that step.
One of the worst things that someone can do is quit their job before confirming that another job is waiting for them. Anyone who quits before this happens can encounter many risks. The biggest hazard is that a new job ‘isn’t ready’ for you or no longer exists. When this happens, economics quickly become a reality.
Opportunity cost (we’ll discuss that in a future article) is how much you will lose by not working. A good question to ask yourself should be ‘should I take a job paying less than before or wait for a higher salary?’
Let’s say that one was making $50k per year. Most employers pay for benefits (health insurance, 401k matching, paid sick days, bonuses/profit sharing, etc.); and let’s not forget the tangible and non-tangible items such as vacation time that you won’t be accruing, a lost company car or vehicle allowance, etc. For our example, we’ll use 30% so that should go on top of the $50k, so $65k will be our figure.
The $65k figure divided by 52 weeks comes to $1,250/week. That comes out to $250 per workday. Using the same math, someone in the $75k range loses $1,875/week and those in the $100k bracket lose $2,500/week.
What happens if you come across an opportunity that pays a little less than you were making before. Here is the mindset that must be considered: at $50k for your last position and you just got an offer for $47k. Is it worth it to take the lower-paying position? Here’s what to ponder: How close are you to another offer that will get you back to $50k? How long will you have to wait? If your other ‘pending’ offer is three weeks or so away, it is actually worth it to take the lower-paying position. Crazy? Not at all.
Since your opportunity cost is $1,250 per week, you would have to get another job at even more money and start in less than three weeks to make the same amount of money at your last job: ($50,000-$47,000/$1,250= 2-1/2 weeks. It could actually make more sense to accept the lower-paying (and guaranteed) job rather than wait for the higherpaying position if you think that the hiring process will drag on. Other things to consider is the emotional toll it takes while waiting for an offer to come along, the terminated health benefits and the usual long waiting period for them to start kicking in again at a new job.
Of course, if the ‘promised’ position brings substantially more than what is currently being earned, then it might pay to roll the dice and hope that things come to fruition. Soon.
The best advice is to go for the sure thing. If that means staying in a job that is less-than optimal while awaiting the dream gig, then it’s better to go the safe route. Not only will the money and benefits keep flowing it will also keep your résumé looking its best so there are no gaps in employment.