In the midst of a pandemic that has cost hundreds of thousands of jobs and work hours, offering earned wage access – or EWA – to employees is more important than ever. Workers are more dependent on paychecks in times of crisis like what we’re experiencing today, due to loss of hours and loss of income, both individually and within the greater household. In fact, more than three quarters (78%) of Americans rely on their next paycheck. In addition, the gig economy and general cultural movement towards instant gratification means even salaried employees feel the traditional pay period is outdated.

Offering EWA is a simple way to engage and retain employees, as well as differentiate your company from the rest for future hires. Here are some questions you may encounter when presenting EWA to your leadership team.

“Will our employees abuse this service and does it encourage bad habits?”

EWA doesn’t encourage bad habits, but it does prevent bad situations. Our data shows that 22% of employees use EWA each pay period, with an average of $130 of earned pay accessed. This indicates that those who turn to EWA are using it for small expenses that are off-rhythm from their standard pay period – not frivolous spending. Without EWA, these same employees would be forced to turn to high-interest payday loans, indubitably leading to long-term financial burdens. Predatory interest rates, overdraft fees, and late fees add to daily financial stresses, potentially affecting an employee’s mental health and workplace performance, and permanently affecting credit scores which impacts an employee’s financial freedoms. 

However, we understand employers’ concerns around wanting to ensure their employees still receive a paycheck when payday comes around. The good news is that it’s easy to customize these kinds of guardrails – for example, setting a max EWA withdrawal of 50% of earned wages. 

“Will our employees even use this service?”

A recent study showed that 72% of Americans want on-demand access to their wages, but only 6% have the option of using an EWA solution. Before assuming what your employees would or wouldn’t use, ask them. There is a considerable stigma around EWA; money is a sticky issue and no one wants to admit they are tight on cash. But the data shows that far and away, people would value the option of EWA when they need it. Simply having the option available is an important tool to help employees build a healthier financial future.

“Our team is 100% salaried, so does EWA apply to us?”

Salaried employees are not immune to the financial issues we tend to associate with hourly employees. Unexpected medical bills or a car that needs fixing, a roof leak or having to put mom in a nursing home – all are lived experiences that affect people regardless of income. And fewer people have a savings cushion these days, with 40% of Americans saying they would need to find an alternate cash source to cover the cost of an unexpected $400 expense. On top of that, even employees who are saving can view EWA as an important retention tool. From Grubhub to Lyft to Amazon Prime, we’re living in an era of instant gratification. People want what they need when they need it – and that goes for salaried employees as well as hourly ones. 

“We’re so busy, should EWA be a priority right now?”

While EWA is a newer concept today, it will soon be standard operating procedure. EWA is moving from a unique niche service to a standard benefit that employees will come to expect. By making EWA available to employees now, you can get ahead of the competition by offering a significant benefit that increases employee retention and motivation. Once EWA goes mainstream, not offering it to employees could lead higher turnover. The good news is that it’s ok if you’re busy – very little time and energy is needed to implement this benefit for your employees.

“We can’t afford to change payroll vendors; how does implementation work?”

Well, good news for you – EWA can be implemented with minimal time, and without any resource investment. You can even stay with your existing payroll company. Immediate integrates seamlessly with any payroll platform to track wages that are earned but not yet paid, and we handle the disbursement of the funds, so you don’t need to worry about anything. When your existing pay day comes around, Immediate automatically pays itself back any money that was requested and delivered to employees. There are no up-front costs, and no ongoing costs, unless your company elects to cover the nominal service fee ($3-5) associated with an employee’s EWA transaction.

Right now, EWA is the edgy new benefit on the tip of everyone’s tongue, but it’s understandable that leaders may push back on the idea because they don’t know enough about the concept. I hope breaking down these five key areas of pushback help you have a more in-depth conversation with your organizations’ leaders about the value EWA can provide your employees, and your company. For more information or if you have questions, reach out to me at mason@joinimmediate.com

Mason Beard – Chief Strategy Officer, Immediate