With most employees living paycheck to paycheck, financial emergencies are all too common. Without saving money, they can rely on credit cards and payday loans, which carry high-interest rates and fees.
Employers that offer EWA benefit from happier and more focused employees who no longer have to worry about their finances. This is an essential employee retention tool in a tight job market.
Employees feel better about their job when they know they can meet their financial obligations, which leads to higher productivity. This is especially true during a crisis, like the Covid-19 pandemic, when employees are concerned about whether or not they can afford to make ends meet.
When workers are stressed, their performance suffers, and they lose focus. In addition, money worries can lead to higher absenteeism, which costs companies more in lost productivity. Offering earned wage access can help reduce this burden and increase morale.
So, what is earned wage access? Unlike payday loans or credit cards, which are expensive for workers and can quickly derail their financial stability, earned wage access is free for employees. When they receive their wages, they can choose how and when to withdraw them. This gives them more control over their money and helps them build a savings habit that works for them.
Providing employees with on-demand pay can also improve their loyalty to the company and reduce turnover. This is because they are more likely to stay when they feel secure and autonomous. A Ceridian study found that 78% of employees say they are more likely to remain with a company that offers earned wage access than one that does not. Moreover, it can take months to break even on the cost of hiring a new worker, so reducing turnover is essential for employers’ bottom line.
In addition to toxic workplace culture and lack of career development, financial stress is the top reason employees leave their jobs. Employees who feel stressed about money have more difficulty concentrating on their work and often lose productivity as they think about how they will pay bills or buy groceries. By offering earned wage access, you can help your employees build savings and avoid costly debts they can’t afford. Employees who feel financially stable are happier, more relaxed, and more likely to stay with your company longer.
For hourly workers who live paycheck to paycheck, EWA allows them to meet their monthly financial commitments without stress. It also allows them to save money and build an emergency fund without the hassle of navigating payday loans and credit cards that come with high-interest rates.
In the past, many hourly employees have turned to options like payday loans or credit cards in times of need. These high-interest, high-fee options hurt their finances and are difficult to manage long-term. By offering earned wage access, you can eliminate these high costs and allow your employees to manage their finances on their terms. This can be a huge selling point for potential candidates in a highly competitive hiring market.
Increased Employee Satisfaction
Employees who have access to their paychecks earlier can manage their finances more efficiently and reduce financial stress. They can also avoid incurring debt or paying late fees when expenses pop up – which helps them save money over time and build an emergency fund. This gives them a greater sense of financial security, which has been shown to improve job satisfaction.
Many companies offer earned wage access (EWA) to support employee financial wellness and boost productivity. A study found that organizations with EWA see a 50% reduction in turnover. This is likely because hourly workers are more satisfied with their jobs when they have early access to their wages.
This is because they can budget more effectively and avoid high-interest credit card and payday loan fees, which can add up quickly. This also allows them to focus on their work without worrying about meeting their monthly bills. Employees who aren’t living paycheck to paycheck can save more, and those with financial stability feel less stressed at work. This is also good for the company, as happier and less anxious employees are more focused and productive.
During times of high unemployment, employers compete for top talent. Offering a benefit that shows your employees you care about them, like earned wage access, can help you attract and retain the best staff.
Earned wage access is a safe and responsible way for workers to get money before payday. It avoids the risks associated with 3rd party vendors, pawning personal possessions, or using credit cards with high-interest rates, which can trap workers in a cycle of debt.
The benefits of implementing an EWA program are clear: It reduces employee stress and improves the quality of their work. In turn, it helps companies meet their operational and financial goals. It also helps companies save on costly staffing expenses due to decreased turnover.
Adding earned wage access to your employer benefits package is easy. You can offer this financial wellness benefit through a software platform connected to your payroll provider. The platform makes the necessary payroll deductions and then sends your employees their available wages. They can receive this money through a bank account or a prepaid debit card (with a configurable withdrawal limit set by your company). You can also provide employees with a pay statement that includes their available wages, deductions, and other important information.