Boosting Financial Wellness by Helping Employees Meet Their Everyday Needs

BY Jane Hodges | July 10, 2024

An auto repair, sick schoolkid, sudden medical or vet bill, or a home maintenance headache can wreak havoc on many employees’ budgets and stress levels. It’s not that working adults can’t manage the money they earn, but sometimes they can’t access it fast enough. When surprise expenses strike, workers on tight budgets often pay high fees to banks, credit card companies, or “payday” lenders to access quick cash for ordinary emergencies.

Employers have become increasingly cognizant of workers’ financial vulnerabilities, especially as inflation has hiked prices on necessities such as gas, food, rent, and utilities. Some research indicates that as many as 72% of employees don’t have $500 in savings, says Steve Davis, national sales manager at Global Payments.

But when employers offer their teams a workplace payroll benefit known as earned wage access, employees can tap up to 50% of current net earnings ahead of payday without incurring high fees, raising debt levels, or harming credit scores to address emergency expenses. Global Payments has offered employers technology and training so they may extend earned wage access as an opt-in benefit for three years.

Davis spoke during a From Day One webinar and offered insights on how employer-offered earned wage access can benefit both employees and workplaces. “Waiting two weeks or more for a paycheck can cause quite a bit of financial strain,” he said. “We’re all living in an on-demand world. So why don’t we have pay on demand as well? That’s our question.”

While some employees may never tap into earned wage access, its presence can offer them peace of mind against financial precarity. According to Davis, in one workplace study 60% of employees shared that financial decision-making impacts their mental health. And employers that offer benefits to reduce financial strain can help employers hire faster.

“We’ve seen about twice the number of applications come in for jobs at employers that offer this type of benefit. So, it helps that employer hire faster,” Davis said. “Most employees taking advantage of the benefit are staying about 22 or more days longer. And there’s about a 49% to 50% increase in retention for individuals using it. It can create a sense of loyalty to employers (when) employees perceive that their workplace is one that genuinely cares.”

Employers offering earned wage access can typically roll out the benefit in 45 to 90 days, depending on the size of their enterprise and their priorities. Global Payments’ system integrates with timekeeping, payroll, or HCM (human capital management) systems, and earned wage access technology integrates with those systems. Employees need only provide their email address and contact information to activate access to pre-payday wages.

Steve Davis of Global Payments was interviewed by journalist Jane Hodges during the From Day One webinar about "Boosting Financial Wellness by Helping Employees Meet Their Everyday Needs" (photo by From Day One)

About 75% of the employers using Global Payments’ earned wage access benefit extend it specifically to their hourly workers, who are often employed in fast food or retail jobs, but increasingly also manufacturing or healthcare, as well. It’s less common, but possible, to offer it to salaried workers. Davis notes that employees working in hourly roles at companies can get paid instantly for “gig economy” shifts (such as driving and delivery services), so employers offering faster pay access for hourly work can compete better against gig jobs.

To use earned wage access, employees can use an app to check what funds they have earned during the current pay period and how much they are eligible to withdraw — with funds transmitted via their employer-issued payment card (a card used by many unbanked hourly workers), ACH, or direct to a particular credit card or payee. The 50% limit on net earnings is designed on industry recommended maximums, and employers can elect to reduce the amount available — or how many times employees can use the benefit in a given year. In most cases, Davis notes, it will take an employer about six months to understand its workforce’s use patterns with the product.

“It’s totally free to the employer, and there’s such a demand from the employee base. And there’s competition for great employees: You’re competing with the gig economy,” Davis said. “I think probably in the next 24 months, most of your mid-market to enterprise organizations will have implemented (some form of) earned wage access offering.”

Editor’s note: From Day One thanks our partner, Global Payments, for sponsoring this webinar.

Jane Hodges is an independent journalist based in Seattle, Washington. Her work has appeared in The Wall Street Journal, New York Times, and The Seattle Times.

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