Should You Take A Lower Paying Job While On Unemployment?

If you’re receiving unemployment benefits, you generally need to be actively looking for work and accept “suitable work” when it is offered. That doesn’t necessarily mean you have to accept any job offer, such as one paying less than you were making. 

Each state establishes its own definition regarding which jobs are suitable and must be accepted by a claimant (or they risk losing benefits). The definition often considers factors such as your qualifications, experience, and prior salary. State guidelines aside, you will also need to consider factors unique to your situation, including your financial position, career goals, and the job market. If you do turn down a job, you’ll want to make sure you do it in a way that doesn’t hurt your finances in the long term. 

Do I Have To Accept Any Job Offer? 

Not all job offers are created equal. For example, there’s the dream job and the job that pays less than you were making and everything in between. How picky can you be while receiving unemployment compensation? Do you have to accept any offer? The laws establishing eligibility for unemployment benefits vary by state, so you should learn as much as you can about your state’s unemployment law before you decline a job. 

This information is usually available on the website of your state’s Department of Labor.  If you receive a lower-paying offer, you will be faced with a tough decision. Understanding the eligibility rules and carefully considering factors unique to your situation will aid in making that decision. The last thing you want to have happen is to lose your benefits because you did not comply with state guidelines. A few of the key factors to consider are discussed in the next few paragraphs.

✓ Turning Down Suitable Work 

States don’t always require you to take any offer for employment. Many states only require you to accept jobs for suitable work, allowing some flexibility to refuse a job while on unemployment. Each state has its own definition of “suitable work” and you may lose your benefits if you turn down qualifying work without a valid reason. It’s possible a lower-paying job will constitute qualifying work in your state and you should know that before making your decision. 

✓ More Flexibility Upfront 

In some states, you may have more flexibility in terms of turning down jobs during the first few weeks on unemployment. States do this by more narrowly defining what constitutes suitable work during a certain number of weeks after you start collecting benefits. After this initial period, you may have less flexibility. 

Many states broaden the definition of what they consider suitable based on how long you’ve been collecting unemployment. In other words, the longer you have been unemployed (e.g., if you apply for extended unemployment benefits), the more jobs will be deemed “suitable” for you by the state. As a result, that lower-paying job that wasn’t considered  “suitable” when you first started your search may qualify as suitable after several weeks. A good reason to hit the ground running. 

✓ Keeping Track of Job Opportunities

Most states have job search and job search reporting rules for individuals on unemployment. Job search requirements differ by state, but usually require a certain number of contacts. The state may also require you to log those contacts and submit the information to the state. Failure to do so could result in the loss of your unemployment benefits. 

Some states suspended the work search requirement at the beginning of the COVID-19 pandemic, due to the high number of layoffs and loss of childcare, but that may no longer be the case. Your state’s Department of Labor website, the starting point for unemployment claims, can be a good resource for the latest information on COVID-related legislation which may impact your unemployment insurance (e.g., the CARES Act). 

✓ Making It Work for You  

In addition to understanding the rules, it is also very important to consider your financial situation when faced with a job that pays less than your last job. Are you able to make ends meet with the unemployment income you are or will be receiving? When will your rainy day fund be depleted if you stay unemployed? Will it last longer if you take a lower-paying job while you apply for a job with a salary that compares to your last job?  

What’s Considered Suitable Work? 

What is “suitable work”? Simply stated, it’s a job that you can perform based on past experience and training. The definition may also include a minimum pay threshold. However, each state has its own definition and how your state defines the term can make a big difference in terms of you finding the job that fits your skillset and financial situation. 

Example: New York State

In New York, suitable work is initially defined as a job you can reasonably do based on your skill and experience. After a certain number of weeks of unemployment, the definition expands to include any work you are capable of doing, even if you have no experience or training. However, the job must pay at least 80% of what you earned over a “base period” (calculated based on your income before filing your unemployment claim). A claimant (someone that has filed for benefits) can also turn down work under certain conditions, such as an unreasonable commute. 

Example: California

In California, skill and experience are considered along with other factors. California defines “suitable employment” as work in the claimant’s usual occupation or for which they are reasonably fitted. In determining if work is reasonably fitted, California considers the degree of risk involved, safety, morals, physical fitness, prior training, experience, prior earnings, length of unemployment, and prospects for securing work in the claimant’s customary occupation. In addition to prior earnings being a factor, the pay must not be substantially less favorable than pay for similar work in the area. 

These examples illustrate how much the definition can vary between states. Other states may have different requirements and look to different factors. Some states even exempt certain people - like union workers - from the requirements. And remember that many states, like New York, change the definition as to what is suitable based on how long you've been collecting unemployment benefits. This underscores the need to check your state's regulations, and other resources you may be able to find on the Department of Labor website, early in the process and definitely before you turn down a job. 

Factors To Consider When Deciding on a Lower Paying Job 

Deciding what to do when faced with a job that doesn’t pay as much as your last job isn’t easy. There’s a lot you should consider - from your and your family’s needs to the guidelines set by your state. Here are a few things you’ll want to keep in mind when making this decision. 

Your Financial Situation 

Every job seeker’s situation is different. Your financial situation will determine whether you’re in a position to turn down a job offer for a lower paying position. You will need to address some tough questions, including: 

● How long will the unemployment benefits be available to you? 

● Do you have an emergency fund? Do you want to use it now? 

● Can you get by on less money than you were making? 

● How long can you reasonably be without a job before you may be forced to accept something just to have money coming in to keep a roof over your (or your family's) head, the lights on, and food on the table? 

For most people, the longer you remain unemployed, the more flexible you will need to be about the type of job you are willing to accept. Even starting out at less than full-time may be a viable option. 

Your Career Goals 

Your career is important to you and you may be concerned that a job that pays less than your last job will derail your career path. This is a reason many job seekers refuse lower-paying or lower-level jobs. While a valid concern, this must be balanced with the prospect of being out of work for a long time, which can look especially bad on your resume. 

There will likely come a time when just getting back into the job market will be better than having to explain a six-month period of unemployment to a prospective employer. Even if you can only work part-time, it might help your resume. 

Additionally, just being back in the job market can open other doors and bring with it additional job opportunities. If you’re waiting for just the right job opening, even if it comes, that's no guarantee that you will be hired for it. You still have to compete with other job candidates.

The Job Market 

You will also want to consider the fact that the job market is changing, with employers looking for less costly employees to do the work for them. This could include freelance, part-time, temporary, and contract laborers. Generally, employers do not have to provide any types of benefits to these laborers (health insurance, etc.). You may need to keep an open mind and adjust your expectations to consider the realities of the current employment landscape. 

Work-from-home or side job options are expanding in the current market. You may be able to turn one of these opportunities into extra income, possibly even a full-time income. Don’t rule out a pay cut or the possibility of a career change when looking for a new job. 

If You Decline a Low-Paying Job, Don't Burn the Bridge 

What if you are able to turn down a low-paying job? There is a right and wrong way to decline a job. This is not the time to burn bridges. Be gracious, and express gratitude for the job offer. It is easy to do and could pay off down the road with a path to a better job. 

If you’re interested in the job but the pay is too low, respectfully make this known. Before declining the position, see if you can negotiate a higher salary. It could pay off. Also, if the job is not what you want but you are interested in the company, let them know that. Maintaining a cordial rapport with potential employers could lead to a different job, one that you might like. 

Let's Summarize... 

Whether you should accept a lower-paying job while receiving unemployment compensation is a tough decision. Depending on how your state defines “suitable work” you may be able to turn down a job without repercussions. But it’s important to know what is considered suitable in your state, and remember that the definition can change based on how long you’ve been unemployed. An informed decision is the best decision. And when you do turn down a job, look for other opportunities at the same company and don’t burn any bridges!