With earned wage access, every day can be payday
Businesses today are empowering employees to choose when they get paid, building this new benefit into their payroll programs.
The idea of “payday” has been enshrined in our culture, immortalized in everything from country songs to movies. Getting paid on Friday, bi-weekly or the “first and 15th” in many ways is fixed in our collective consciousness.
But for a society that increasingly hates to wait, there’s a new way to think about pay: the ability for employees to access wages as they are earned, rather than on an employer-determined schedule.
It’s called earned wage access (EWA). Businesses today are empowering employees to choose when they get paid, and building this new benefit into their payroll programs by providing immediate access to hard-earned income at no additional cost.
Related: On-demand pay: What employers need to know
It’s not a radical idea. Pay periods have never been set in stone – in fact, they have varied widely through history. According to Nelson Lichtenstein, history professor at UC Santa Barbara: during the agricultural era, people who worked on farms typically were paid once per year. It was not until World War II that companies largely adopted a bi-weekly or monthly pay period to accommodate a new payroll tax.
Today, modern technology enables organizations to break free of that outdated payroll paradigm. For example, prepaid payroll delivery services like Money Network from Fiserv are already able to simplify and optimize payroll for businesses, reduce administration costs and improve security, while making it easier for workers to receive their wages electronically and manage their finances.
Pairing EWA with the flexibility of a prepaid payroll service, especially one that incorporates budgeting tools and spending insights, is a logical next step. At a time when 69% of Americans are living paycheck-to-paycheck, according to the American Payroll Association, the ability to provide faster access to wages and tips can be a significant differentiator in an employer’s total benefits package.
For corporations, franchises, governments, and other types of employers challenged with attracting and retaining talent and lowering absenteeism in today’s digital-first world, providing faster access to wages and tips can be a significant competitive advantage. According to Visa, 79% of consumers would be willing to switch to an employer that offers EWA.
We are seeing EWA take off in gig economy companies where workers prefer to get paid when a job is done, or delivery is made; and in industries such as restaurants where wait staff have experienced a significant shift to digital tipping – and waiters and waitresses alike still prefer to “cash out” their tips instantly when a shift is over.
In an on-demand economy, employees increasingly want to be paid on their own time with the speed and convenience they are accustomed to in a digital world. With so many workers in favor of having the flexibility of EWA, now is the time for savvy employers to deliver.
Anne Evers is vice president, Prepaid and Digital Payouts, at Fiserv.
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