As an executive recruiter specializing in consulting engineering placements, I hear this quite often. It generally relates to relocation from a high cost of living area to a low cost of living area. If you are moving from Washington, DC to Charlotte, NC you will have to “take a cut in pay.” The salaries are lower but what that money buys you at the end of the month costs less, too.
So, let’s do the math. In Washington, DC if you are making $100K, you only need to make $70K to have the same standard of living based on a basket of factors with housing being the largest factor. Housing is 65% less in Charlotte, NC than it is in the DC area. Based on CNN Money, groceries are less, transportation is less but utilities and health care are slightly more expensive, but with a 65% reduction in the cost of housing, are you really taking a cut in pay?
A recent article on mlive.com talked about how much $100 buys in all 50 states. http://www.mlive.com/lansing-news/index.ssf/2015/07/100_goes_farther_in_michigan_t.html. In Virginia, $100 only buys you $97.09 worth of goods while the same Ben Franklin in North Carolina yields you $109.05 at the end of the day.
If you are considering a relocation for a new job and you are given an offer that is less than you are making now, do the math and run the numbers and you will probably find that taking a “cut in pay” makes good “cents”.