How to use the pay cut calculator
- Enter your current pay and choose whether it is quoted per year, per month, every two weeks, per week or per hour.
- Enter the hours you work per week if you want hourly and yearly figures to line up.
- Choose how the cut is given: as a percent, as a dollar amount in the same pay period, or as the new pay.
- Read the new pay, what you lose per year, month and week, and the raise you would need to get back to your old pay.
Formula
Cut = current pay - new pay
Percent cut = cut / current pay x 100
Raise needed to recover = current pay / new pay - 1
Yearly pay from hourly = rate x hours per week x 52
A raise applies to the smaller pay, so the raise needed to recover is always larger than the percent cut.
A 10% cut on $78,000
A 10% cut takes $78,000 down to $70,200. You lose $7,800 a year, which is $650 a month and $150 a week. In hourly terms the pay falls from $37.50 to $33.75 on a 40 hour week.
To get back to $78,000 from $70,200 you need a raise of 78,000 / 70,200 - 1, which is 11.111%. That is why a 10% cut cannot be undone by a 10% raise: 10% of the lower pay is only $7,020.
Why the recovery raise is bigger
Percent changes are measured against different starting points. A cut is measured against your old pay, and a raise is measured against your new, lower pay. The same dollar difference is a larger percent of a smaller number. A 20% cut needs a 25% raise to recover, and a 50% cut needs a 100% raise.
For raises themselves, the pay raise calculator handles percent, dollar and new-pay inputs, and the percent change calculator works with any two numbers.
Looking past the headline number
A cut to base pay can also change overtime, bonuses based on a percent of salary and retirement matches. Those effects depend on your plan documents and are not in this calculation. The hourly to salary calculator is useful when a cut comes with changed hours.
To plan for the lower income, put the new monthly pay into a budget planner and see what has to change.
Assumptions and limits
- Pay is gross pay before taxes and deductions.
- Conversions between pay periods use 52 weeks a year and the hours per week you enter.
- Benefits, bonuses, overtime and retirement matches are not modeled.
- Whether and how an employer may reduce pay depends on state law and your agreement. This is not legal or payroll advice.
Frequently asked questions
How do I calculate a pay cut percentage?
Subtract the new pay from the old pay and divide by the old pay. Going from $78,000 to $70,200 is a cut of $7,800, and $7,800 / $78,000 is 10%.
What raise do I need to make up for a pay cut?
Divide the old pay by the new pay and subtract 1. After a 10% cut you need a raise of 11.111% to return to the old amount.
How much will I lose per paycheck?
Divide the yearly loss by the number of paychecks. The tool shows the loss per year, per month and per week. For a twice a month schedule, divide the yearly figure by 24.
Does a pay cut change my hourly rate?
Yes, if your hours stay the same. The tool shows the hourly equivalent before and after the cut using the hours per week you enter.