In a highly competitive job market, businesses seek ways to attract and retain top talent. One way is by offering earned wage access. Earned wage access is a new payroll solution that gives employees instant access to their wages. Also known as same-day pay, it can help workers avoid overdraft fees and high-interest predatory payday loans.
Employees Are More Satisfied.
In a time when 78% of employees live paycheck to paycheck, providing them with on-demand pay is a huge benefit. It can help them manage unexpected expenses, such as a car repair or an emergency medical visit, so they don’t get stuck paying high fees or getting into debt. These expenses can be a huge burden on hourly and salaried employees, who have a lot to balance weekly or monthly. Instead of turning to 3rd party vendors, pawn shops, or even credit cards, they can access their earned wages through an on-demand pay app and avoid the high-interest rates and debt traps that come with those alternatives.
Employee satisfaction improves when they have access to their own money, reducing financial stress and allowing them to feel like their employer cares about their well-being. This translates to increased loyalty, with employees more likely to stick around if their company offers earned wage access. A recent study found that on-demand pay boosts employee retention by nearly 36%.
Employees Are More Productive.
When employees are happier with their jobs and less stressed about money, they perform better. Offering earned wage access is one way to reduce financial stress and improve employee performance and retention.
It’s no secret that many workers live paycheck to paycheck, and it’s often difficult to afford essentials like food and rent. This lack of liquidity is a major cause of stress that can lead to health issues, including sleep disorders and anxiety. Fortunately, with on-demand pay, employees can access their earned wages as needed without worrying about overdraft fees or sky-high interest rates. Studies show that employees with same-day pay are more likely to be satisfied with their jobs. 77% of HR leaders say reducing staff turnover is a critical priority for their organizations.
Employees Are More Engaged.
For employees struggling to get by financially – including most hourly workers – accessing wages on their terms rather than at a set time can be invaluable. It can allow them to avoid financial stress, pay their bills, and even put some of that money toward unexpected expenses or emergencies. Offering earned wage access also helps them avoid costly fees from credit card use or predatory payday loans. That means they can spend less time worrying about their finances and focusing more on their work. Earned wage access, also known as on-demand pay or instant pay, allows employees to withdraw cash from their paychecks — often for a small fee — before the scheduled payday. Employees can then use their funds to meet short-term needs, such as paying their rent or car payments. They can also cover emergencies, such as medical expenses or unexpected home repairs. This financial flexibility can make the difference for an engaged and productive workforce.
Employees Are More Loyal.
Earned wage access, or early wage access or on-demand pay, is a new payroll innovation that allows employees to withdraw the money they’ve earned before their scheduled payday. This helps them to avoid overdraft fees, late payments, and high-interest predatory payday loans and better align their paychecks with their monthly financial commitments. Employees with access to their wages regularly experience less financial stress and can save more, building an emergency fund for the future.
They can also focus on their jobs and their lives without the distraction of wondering if they can make it until payday. As a result, they’re more loyal to their jobs and lives, helping them feel more connected to their work. This is especially important in the current labor market, where turnover and absenteeism are rising. In addition to improving the quality of work, offering earned wage access can help companies to retain their best and brightest employees. This reduces the cost of hiring and training a replacement, saving money in both the short and long run.
Employees Are More Productive.
When employees can access their wages outside the traditional payroll cycle, it gives them more financial flexibility to align their paycheck dates with their finances. This allows them to save and cover unexpected expenses — including car repairs, home repairs, credit card bills, and other emergencies — without incurring debt or paying high overdraft fees and interest rates. When employees can pay their bills with the money they’ve already earned, it eliminates financial stress, leading to a lack of focus and productivity at work. It also reduces the number of days lost to absenteeism and hurts morale. To implement an EWA program, companies must sign up with a service provider that can sync with their existing payroll system and track employee hours and earnings. Once complete, they can offer employees the option to request a wage advance through an app. The app will automatically make payroll deductions and ensure the correct amount is available when they need it.
