Employees with flexible pay see boost in financial health and job satisfaction

In today’s dynamic work world, boosting employee retention, engagement, and productivity is paramount. Recent research is showing on-demand pay has emerged as a proven financial wellness solution to help do that.

On-demand pay revolutionizes the outdated two-week pay cycle, enabling the modern worker to access wages as soon as a shift ends. Such innovations are increasingly critical given that financial wellness has emerged as the number one requested employee benefit, some experts say.

No wonder. Given a year of belt tightening by companies and high inflation that’s increased the cost of living, employee financial stress is on the rise, states PwC research.

PwC’s 2023 survey on employee financial wellness found that 60% of workers were stressed about finances—a slightly increased number than during the pandemic. Higher paid workers are not immune, with 47% of those making more than $100,000 a year feeling financial stress. PwC also found that 49% of full-time workers struggled to meet expenses on time, and almost 1 in 3 (28%) often or always ran out of money between paychecks.

What’s more, 1 in 3 workers told PwC that financial stress hurt their work productivity.

On-demand pay: Part of a benefits package

In today’s economic climate, where employers need ever more from existing or even shrinking workforces, hits to productivity domino negatively throughout the organization.

To combat financial stress, on-demand pay delivers increased financial control to workers. Also referred to as earned wage access, on-demand pay as a part of a benefits package can help employees meet their obligations on time, strengthen retention, and boost engagement among employees, new research shows.

SSRS, on behalf of Ceridian, conducted a survey of more than 2,000 U.S. employees who had flexible access to their earned wages through Dayforce Wallet. The survey found that:

• 9 in 10 workers said that having access to money quickly when there is an emergency is considerably, very, or extremely important to them
• On-demand pay is nearly as important an employee benefit to them as retirement/401k (83%) and life insurance (79%)
• 84% said it helped them pay most bills on time
• 64% said they’d take extra shifts because of on-demand pay
• 54% said they’d be less likely to leave an employer who offers on-demand pay

The trickle-down costs of financial stress

When workers are financially stressed, negative impacts pile up on companies. Unhealthy workers translate to higher health care costs, higher absenteeism, and lowered productivity. What’s more, finances help determine the future makeup of a workforce. If people are financially stressed, older workers may not retire, which impacts opportunities for younger workers, and those mid-career may not feel they can afford to take on certain roles or devote time to upskilling to meet new challenges as company needs change. All of these factors trickle down to impact a company’s ability to attract and retain the best people and get their best work.

Low-lift, high-reward

Given the current economic climate, employees are increasingly turning to their employers for assistance in achieving financial wellbeing. On-demand pay is a benefit that workers clearly notice and use.

Some on-demand pay services charge workers a fee to access their wages. For low-wage workers, especially, these fees can really cut into their take-home pay.

Related: Raises are getting smaller, and fewer employees are receiving them

However, on-demand pay can also be offered through company payroll—at no cost to either employee or employer—and in such a way that taxes and other items are fully deducted so the payroll is fully compliant.

Offering on-demand pay is a low-lift, high-reward financial wellness benefit that works whether companies are hiring full time workers, part time workers or gig workers and, it is, the future of pay.

Deepa Chatterjee, COO Dayforce Consumer Services, Ceridian