Who would have believed 18 months ago that there would be over 9 million Americans out of work today and that employers would be struggling to fill positions despite that number?
Not many of us! So, how did we get here, and what’s the solution?
Let’s start with the obvious: Many people dropped out of the workforce or were made redundant during the first year of the pandemic. But as the country started reopening and more people got vaccinated, many economists thought that employees would start returning to work pretty quickly. Yet, that hasn’t happened.
To use an industry example: Before the pandemic, 38% of manufacturers had trouble finding candidates with the right skills, and today that number is 54%.
Interestingly, hourly wage earners and “deskless” employees are the ones that are currently in the greatest demand but least inclined to return to work.
Feeling undervalued and disengaged, along with the need for better pay are some of the reasons that hourly workers are disinclined to re-enter the job market.
Hourly workers are also disproportionately affected by what’s called “income volatility” – not knowing how much money they’re going to make and if it’ll be enough to make ends meet. Too often, hourly workers live from paycheck-to-paycheck and can only bridge the gap between needing money and getting paid with late and overdraft fees or expensive payday loans.
For example, workers now need to make $42 an hour in order to spend the recommended quarter of their income on an average one-bedroom apartment (in June 2021, this amount was $1,711). Meanwhile, the average hourly wage for restaurant workers is $11.52.
Other reasons for employment reticence include being worried about getting sick, not wanting to wear a mask for long hours, and a reliance on government benefits. Many hourly workers have simply re-evaluated their lives and decided they need more flexibility and better benefits and working conditions.
So serious is the skills shortage situation that some businesses are now even paying people just to apply for a position!
Now, the burning question is: What can organizations do to entice members of this sector of the workforce to come back to work and position themselves as an employer of choice?
The first step in addressing the problem is understanding precisely what it is that employees want.
Compensation is relatively easy to grasp. But “employee benefits” is a broad topic and can involve numerous programs and interventions, and it might be difficult to know where to begin.
But, given that so many people are currently living under intense financial pressure, wouldn’t this be a good place to start?
One of the most impactful (yet also simple and cost-effective) ways to offer employees relief from their financial stress is by introducing Earned Wage Access (EWA).
EWA allows employees to access what they’ve already earned immediately to pay bills or buy what they need. They can transfer their earned wages to their bank account or card – within seconds.
EWA supplies workers with round-the-clock access to money that they’ve earned. As an employer, you can give your people instant access to their cash once they’ve earned it. This instant access protects employees from resorting to payday loans or overdrafting on their bank accounts and having to pay expensive fees. So, by offering EWA, you can safeguard your employees from cyclical debt cycles and provide a pathway to financial stability.
The best way to execute financial wellness programs like EWA is through API integration with your organization’s payroll and HR management systems so that employees’ earnings are automatically available in the mobile app.
This also ensures you can make all necessary payroll deductions prior to making the earned wages available and that all accessed amounts are deducted as a part of the standard payroll process.
While the benefits of EWA are intuitive for employees, some businesses need a bit of convincing initially. If you’re one of them, read on:
Todd Baker, a research fellow at the Harvard Kennedy School of Government, conducted a landmark study on the impact of EWA on both businesses and their employees. After an in-depth analysis of over 6,700 individuals across 6 businesses, his research found that EWA reduces employee turnover by at least 19% and increases employee productivity, engagement, and morale.
EWA reduces employee turnover by at least 19% and increases employee productivity, engagement, and morale.
Since the average cost of replacing a single employee now exceeds $4,000, a marked reduction in turnover means millions of dollars in savings for businesses.
Still need convincing? Well, just consider these figures from Visa Insights report:
From the Fortune 500 to SMBs, EWA is rapidly growing in adoption. That’s why Payactiv, the leading provider of EWA, is live in 1500+ businesses and used by over 2 million employees at businesses like Walmart, Alorica, and Wendy’s.
Here are some of the happy outcomes you can look forward to if you decide to become one of our partners:
In an environment where it’s tougher than ever to find the skills you need to run and grow your business, an EWA program is a great way to make your organization stand out.
If you’re keen to step up your recruitment efforts, learn more about what today’s workers are looking for, and understand how you can optimize your recruitment strategy for your essential workforce, take a look at our on-demand webinar “Stand Out in the Hiring Process.”
To learn more about Payactiv’s services, get in touch with us, and let’s talk.
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