More than 78% of the U.S. population currently lives paycheck-to-paycheck. With this staggering figure in mind, employee retention has become more important than ever for the 11 million employers currently in business throughout the country.
And among the many challenges in this competitive market for employers is the struggle to attract employees – particularly for the higher-paying industries.
As Generation Z floods the workforce, the need for financial wellness and workplace flexibility is now key. Employees want to feel both respected and rewarded for their efforts when they put in the hours. Younger millennial workers also want to see examples of change, progression and flexibility from traditionally conservative employer models.
- One out of every 10 workers earning $100,000+ lives paycheck-to-paycheck
- A quarter of workers cannot set aside any savings
- Three-quarters of workers are in some form of debt
- Just over 28% of employees currently earning $50,000-$99,999 live paycheck-to-paycheck and 70% are in debt
With this situation in mind, software and fintech providers have been trying to develop a solution to help businesses attract and retain staff. Among the more substantial offerings to be considered: earned wage access or EWA.
What it is and what it isn’t
In short, earned wage access platforms allow employees to access their accrued wages before payday. An employee can access and withdraw their pay throughout the month as it is paid into their account, allowing them to manage their finances better and use the funds for much-needed payments.
While EWA isn’t a magic solution to an employee’s financial burdens (and doesn’t try to be as much), it can definitely go a long way in helping them manage their finances. And when you consider that the main worry for most employees is falling into debt through late or missed bill payments, having access to money early each month can be a huge help.
How does it help a company retain its talent?
In a competitive job market, this financial assistance can be the key to finding and keeping the next star employee a company needs. In 2021, the top talent wants certainty; they want to be able to budget effectively and pay their bills on time, every time.
And while this type of platform is a relatively recent entry, around 61% of US employees currently support the introduction of earned wage access. Having this perk listed on a job description could genuinely be a make-or-break factor at the application stage.
Another issue raised by workers across the United States is their lack of budgeting knowledge. Only 32% of employees actually had a budget at all in 2019, which is a concerning figure.
With this in mind, a number of earned wage access platforms have gone as far as introducing extensive budgeting and savings tools to their platforms. These tools include useful functions such as alerts that warn users when they are spending unusual amounts or flag potentially fraudulent activity when it occurs. Having access to these tools could be the difference between falling into debt or remaining financially healthy. With 48% of the U.S. workforce claiming that their financial worries are a distraction at work, EWA access could create a more focused working situation for all.
Earned wage access solutions and financial wellness go hand-in-hand. The modern employee wants to feel like they are valued as individuals while being given the freedom to access their earned wages with total flexibility. The time for bi-weekly payroll is coming to an end and earned wage access platforms are gradually ushering in a new era in payments.