Make any day payday: All about Earned Wage Access
According to this recent CNBC article 64% of Americans are living paycheck to paycheck. While most people think of lower paid people, the report found “For the first time, more than half of all six-figure earners also said they were stretched too thin, a jump from 42% a year ago”. Now with many companies doing layoffs there is a lot of financial stress on so many people and the topic of financial wellness continues to come up with a lot of our customers. So how can companies help their people address this financial stress?
As most people are familiar with, payroll is run on a period basis (Weekly, Bi-Weekly, Semi-Monthly, Monthly). Payroll has been paid on a period basis dating back since the 1700s (Maybe even earlier in ancient civilizations) and became especially prominent during the industrial revolution as there became more big businesses and they needed a more efficient way to manage paying people for a quickly growing workforce. Once mainframe computers started to become available payroll was one of the first functions to automate as companies moved away from error prone and labor intensive manual work including calculating paychecks, withholding taxes, and generating reports and outputs to send out. As computers got more advanced capabilities advanced in operations and more recently the move to cloud payroll systems, but the periods in which people are paid has remained relatively static. For many countries, they built laws and regulations which assume a period which further cemented this as a normal part of how people are paid.
In the past few years this has started to change and there has been more momentum around “Earned Wage Access”. This is where employees can access money they have earned prior to pay day. Many younger employees who have not gotten used to how society has paid employees they have started asking questions around – why do I need to wait two weeks to get my money? Why shouldn’t I get paid for the work I already completed? This was especially true as the result of “gig” or contract workers who are paid as soon as they completed a job or at the end of the day (Ex: Ride sharing). This has put a pressure on many companies to offer earned wage access to companies and we are now in a date and time where the technology is already in place and available to make this happen.
In this podcast, we take a deep dive into the world of earned wage access. We explore what it is and why it’s needed, the benefits it provides, the deployment models in the marketplace. Our discussions will help you understand how vendors make this a business.
One of the key benefits of earned wage access is its ability to improve financial wellness for employees which is especially relevant now across industries. Many workers struggle to make ends meet and are often forced to turn to expensive payday loans or high-interest credit cards to bridge the gap until their next paycheck. Earned wage access eliminates the need for these costly solutions, as employees can access their earned wages , without waiting for payday. We also talk about the conversation happening around the time value of money.
Additionally, it’s not just employees who benefit from earned wage access. Employers also see improved benefits, such as increased productivity, better employee retention rates, and reduced absenteeism. By providing their employees with greater financial stability, employers can foster a more loyal and productive workforce.
During the podcast, we also explore the legal considerations associated with earned wage access, both domestically in the United States but also some of the changes happening globally which could make these program an imperative. We will provide valuable insights and best practices for ensuring compliance with regulations and protecting the interests of both employees and employers.
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Put your questions in the comments and would love to hear your thoughts
I am glad you are addressing this. I suspect this is the future of payroll. The way I transact using Zelle - I wonder even payroll payments can be like Zelle where one can request and receive their wages ( through Zelle like services ).
Thanks for the comment Rakesh! I definitely agree. The reality is people get used to how things are in their personal lives and getting paid is no different. When we pay friends and vendors we usually do it immediately.