I'm in the process of applying for jobs and attending interviews. So far, it's been really competitive, because of the economy etc. I do have the work experience problem because I'm a post-grad student.
Do I keep on looking and pray for something to pop up, or do I make an offer to them where they pay me peanuts so I can just get the exposure and the foot in the door?
Damn, wish I was still young and this wasn't an issue
It's a hard thing climbing back up after you've gone down but at the end of the day if you need the job and the income, then that's often what you have to do. But don't be afraid to be creative here... look at government and school roles that may pay a fair amount and come with a good 'reason' for the cut. Look for startups that will get exposure. Look for companies moving. If you're going to make a step down, do so in a role you can be happy with and explain when it's time to leave.
Of course if you try to step too far the company knows you won't stay and there goes any chance of getting the role.
While you're trying to get work, it's wroth spending time getting your profile as padded as possible, perhaps while getting some interviews do a bit of free work for some non-profit charities to get you some current items. If you have a strong portfolio, your experience will give you a much better chance at getting hired. Then again you could always consider going it alone as a freelancer! Whichever route you take, do yourself justice and don't cheapen your own value
I agree with AD about doing some freelance work. This will help to show what you can do which can help.
Also, I tell people all the time in this economy get out there and do some volunteer work! It is the easiest way to meet people who could be in a position to help your career. That doesn't mean to work 40 hours a week for free, but take a couple hours a week and find an organization whose goals match your values and get involved. You can get into executive level meetings by offering to help them with their marketing and online presence.