A majority of U.S. workers – 83% – believe they should have access to their deserved wages at the end of each work day or shift, according to a new survey. Their preference contradicts the traditional two- to four-week wage cycles that have been in place for decades.
There is a lot of money at stake. serious estimated every day The U.S. and 36 other developed countries have around $ 1 trillion in accrued employer payslips.
The study of US workers was conducted online by The Harris Poll for HR and Payroll Management Firms Ceridian in August 2021. Ceridian said in the survey: “… has clear expectations from Millennials to Generation X employees (ages 18 to 44) to make payday more flexible.”
For this demographic in the workplace, the survey also found that:
- 80% would prefer their salary to be automatically transferred to their bank account as they earn.
- 78% said that having free access to on-demand pay would increase their loyalty to an employer; 79% said that this would make them feel more valued as employees.
- 81% would accept a job with an employer who gave them free on-demand access to their earned wages compared to an employer who did not.
“These results show that on-demand pay is not just a differentiator, it’s a requirement for employees,” said Seth Ross, General Manager of Ceridian’s Dayforce Wallet and Consumer Services.
“Given the incredible pace of innovation that is affecting every industry, we are entering a new evolution in the way people want to be paid. With Streaming Pay, employers are giving their employees more control over their financial wellbeing. That means giving people the confidence to cover unexpected expenses or capitalize on investment opportunities they might not otherwise have, ”said Ross.
build up trust
HR and workforce expert Dr. Kate Tulenko said, “Companies pay their employees daily for a variety of reasons. One is in low-trust industries where workers don’t necessarily trust employers to pay them. This is especially true in industries where wage theft has occurred in the past or where many of the workers are undocumented. You’ll also see daily salary in industries that have high staff turnover or where employees live from paycheck to paycheck and have historically relied on high-yield payday loans. “
Relief of financial pressures
According to Ernst & Young, “The main use case for on-demand payments is everyday financial pressures, which we believe is widespread: 70% of people in the UK and US experience financial stress on a regular basis. Half of these people are financially constrained between payment periods and encounter this problem approximately every four months.
“The negative impact on individuals is considerable: almost 75% of those who have gotten into financial difficulties have reported material deterioration in their health and well-being.”
A growing trend
Tulenko noted, “The trend towards daily pay is increasing and there are a number of companies that are making it easier for employers to pay their employees on a daily basis. Daily remuneration has also prevailed in industries in which companies compete for employees. Gastronomy, for example, is a perfect storm for daily wages: low wages, many workers without a bank account, high fluctuation and high vacancy rates.
“You also see daily wages in extremely dangerous sectors. For example, in the health sector, workers can be paid daily for work during a pandemic like Covid, where there is a shortage of staff[s] and high personal risk, ”she said.
Advice to business leaders
Impact of daily transaction costs
HR expert Tulenko said, “The disadvantage of daily pay for employees is the transaction cost of a daily payment. In some cases, this can cost more than late fees, overdraft fees, or credit card advances.
“There is concern that with some forms of daily [pay] the fees may end up being higher than the cost of overdraft fees or late payment interest or payday loans.
Faster cash flow
“The disadvantage for companies is the cash flow,” says Tulenko. Instead of postponing the employee’s payday by two weeks or a month, the cash needs to be available immediately. This increases the amount of cash that a company must hold. If a company pays its employees only once a month, it has a longer time to accumulate the cash; But when a company pays daily, it has to have a faster cash flow that provides cash every day. “
She recommended, “A company needs to look into the details and potential implications before considering this [option] for their employees. The company may also be able to address this issue [instead] by granting employees advances in an emergency … or training and supporting them with budgeting. “