In a world where many employees live paycheck to paycheck, accessing their earned wages before payday is essential. They can take out high-interest loans or get behind on bills.
Providing your employees early wage access is a game changer for their lives and your business. It offers these key benefits:
Increased Job Satisfaction
In addition to improving employee health and well-being, reducing financial stress also helps companies improve employee retention rates. This is a critical issue for employers because hiring and training new employees can be expensive and time-consuming.
Companies can offer workers the flexibility they need by offering a solution like access to earned wages, sometimes called instant pay, on-demand pay, or accrued wage access (AWA). Instead of receiving wages at fixed intervals – traditionally on a bi-weekly basis – employees can use their earned wages to cover expenses, such as rent or car payments, without waiting until their next paycheck.
As a result, employees may spend less time worrying about their money and focus more on their work. This can lead to improved job satisfaction, which in turn can boost productivity.
Additionally, AWA can be an excellent way to help employees meet unavoidable financial emergencies, such as a flat tire, medical bills, or a home repair. These costs can devastate a family’s budget and often cannot be covered by credit cards or loans with high-interest rates. Employees can avoid these unmanageable expenses and keep their jobs by offering this benefit. Moreover, by providing a solution to these pressing needs, employees will feel like their employer cares about them and is looking out for their well-being.
Increased Productivity
Many employees live paycheck to paycheck, which can put them under significant stress. This financial strain can lead to decreased job satisfaction and productivity. By offering earned wage access, you can help alleviate some of this stress and improve employee morale and performance.
As an added benefit, earned wage access reduces the need for high-interest credit cards or payday loans. Credit card debt can quickly add up to thousands of dollars in interest charges, so providing employees with access to their money can help them avoid this expensive pitfall.
Employees who use earned wage access are less likely to resort to desperate measures like pilfering cash registers. Because they can get real-time access to their earned wages, they won’t have to worry about their bank accounts running low or incurring overdraft fees.
Earned wage access is a new type of pay that allows employees to receive their net earnings before their employer-designated payday. This service, also known as on-demand or instant pay, is becoming increasingly popular among employers looking to boost employee satisfaction and retention. To offer this type of pay, employers must first work with a financial technology provider to sync payroll data to the provider’s app. Then, the app will make the workers’ net earnings available on demand. This is done without compromising any payroll deductions, including taxes.
Reduced Stress
While financial worries are a huge source of stress for many employees, they can be especially acute for low-paid jobs. This is because those workers often do not have access to benefits like health insurance, higher wages that can offset the cost of living, and even state supports such as welfare payments and childcare grants. This leaves them with fewer options for meeting their bills between pay periods, such as resorting to payday loans or other financing that charges exorbitant interest rates.
Offering earned wage access can help address this problem by allowing employees to get money before their next paycheck. This gives them a sense of stability and control over their finances, which can alleviate stress and improve work performance. It can also help to reduce absenteeism, increase productivity and engagement, and overall morale in the workplace.
Increased Retention
One of the biggest challenges faced by businesses is attracting and retaining employees. While salary increases and new benefits are critical to retaining your workforce, one increasingly important benefit that can make all the difference is earned wage access (EWA).
EWA solutions enable workers to get a portion of their paychecks early using an electronic financial app. This allows them to cover unexpected expenses without waiting for their next payday. They can also avoid the high-interest rates and late fees associated with payday loans.
Most employers offer this benefit at no cost to their employees, although some charge a transaction fee. Once enrolled, employees can receive funds directly into their bank accounts within hours of earning them at work. This can be a great relief for people living paycheck to paycheck who might otherwise struggle to meet their financial obligations between pay periods.
Employees can focus on their job and responsibilities instead of worrying about their finances, which makes them more productive. It also reduces their financial stress, which can lead to some negative consequences, such as absenteeism and turnover. The immediate relief from financial stress provided by on-demand pay benefits the employees and the business. It’s no wonder why many HR leaders are now incorporating this innovative employee benefit into their overall employee engagement strategy.
