A 2021 study by accountancy firm PwC found 42% of US workers find it hard to meet their household expenses on time each month. Others can’t save any money at all and are constantly living in fear of sickness or any need for time off, as it would mean they can’t pay their rent or bills. The cost of living is increasing, and while some organizations can react with increased wages, this won’t solve the problem for many people. The cycle and spiral of debt are already a problem, and quicker, real-time solutions are needed. Every day pay is a flexible and proactive way of giving your employees access to their earned wages and supporting their financial wellness and improved money management.
Simply put, every day pay allows workers to access their earned wages immediately after they’ve worked a shift. It may be the full amount or a specific percentage dependent on the organization in question. Employees of companies partnered with Payactiv benefit from flexible payroll options such as every day pay by utilizing our Payactiv Visa® Prepaid or Payroll Card.
Our clients can make 90% of their employee’s net income accessible from the Payactiv app and the employees can schedule to have any portion of that accessible balance automatically transferred onto their Payactiv Visa Card*. This is done with no cost to the employer or employee and simply deducted during the regular payroll cycle. This ensures employees have quick access to their earned income, with no detriment to the employer. Many gig jobs already offer every day pay, so traditional organizations need to take steps to compete.
Our clients span many sectors of the business world, from international hotel chains to restaurants and food stores. Brands in all these industries and more recognize the value in providing their employees with instant access to their earned wages, promoting improved financial wellness.
How every day pay empowers workers
Hourly workers are often the hardest hit by economic change. Income and expense volatility is high in this demographic, and many find themselves asking how they will pay their next urgent bill before their paycheck is due. CNBC reports younger adults often turn to payday loans to cover regular expenses like rent or tuition. The APR on loans like this can be as high as 400% and leave many people spiralling into a debt trap they can’t get out of. Other methods for acquiring quick cash for essential expenses include:
- Utilizing high-interest credit cards
- Borrowing from friends and family
- Paying from insufficiently funded bank accounts resulting in overdraft fees
- Not paying the bill on time and incurring an additional late fee
Today’s workers often feel these are their only options, especially when an unexpected bill comes along. Unfortunately, while each method has the short-term benefit of satisfying the immediate problem, they lead to higher levels of long-term debt. This often results in additional stress, which makes day-to-day life difficult and can impact an employee’s productivity and effectiveness at work. This has a knock-on effect on your organization as well as employees’ health and wellbeing.
Every day pay promotes better financial wellness and management. This kind of financial stress can be crippling for employees, and every day pay can effectively alleviate the problem. Most employees build up earned wages between their paychecks, and allowing them access to this cash when needed avoids them getting into unnecessary debt or incurring expensive banking fees. Every day pay provides employees with the flexibility they need to effectively manage their money and meet their expenditure, even in those trickier months.
The Payactiv app also incorporates the SmartSave feature, which helps employees to manage their money better and even build a savings pot. There is instant access to financial advice and debt management support, providing your employees with the additional guidance they may need to feel in control of their money.
What about employers?
Employers stand to gain too if they choose to offer every day pay. The Financial Health Network report shows links between absenteeism and financial stress. Employees under financial pressure are much more likely to use sick time even when they’re not unwell, and they’re also more likely to be distracted at work. If you, as an employer, can change this by offering every day pay, why wouldn’t you?
Your workers are one of the most valuable resources your organization has. Without them, you can’t meet demand and keep your customers satisfied. If motivation is suffering due to financial stress, your business productivity will suffer, impacting your bottom line. Every day pay helps empower your workers to manage their money more effectively and avoids the need for unmanageable loan and credit agreements on their part.
Offering every day pay is also an enticing incentive for new hires. It can contribute to your ability to attract, hire, and retain talent within your organization. Employees with better financial freedom and the safety net of every day pay will be happier in their work. Other companies without this offering are unlikely to tempt them away.
Labor shortages impact many businesses across many sectors, so holding onto the employees you have is vital. It is also important to consider the impact of the Covid-19 pandemic and how workers who may only recently have been claiming unemployment checks will be particularly in need of their earned wages as quickly as possible. Every day pay adds flexibility and adaptability to your workplace, attracting a range of employees and ensuring those you rely upon are retained.
Promoting financial wellness
Flexible pay is a cornerstone of financial wellness. More companies recognize that they need to offer more if they want to keep employees happy and provide a supportive work environment. Employers should want the best for their employees, and providing them with the tools they need to avoid financial stress, and the additional pressures that come with it should be standard.
One emergency expense is enough to tip many American households into the debt trap. Every day pay is just one of the financial wellness tools Payactiv delivers. Our suite helps to ensure employers can satisfy their employees’ requirements and provide added value without extensive additional costs.
*The PayActiv Visa® Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at Payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.