There are many great benefits to Earned Wage Access, but what is it and how can it benefit your business and your employees?
Did you know that here in the United States—the richest and most independent country the world has ever known—millions of Americans are living paycheck-to-paycheck? This sobering truth is quite unsettling.
But according to the latest figures presented by the American Payroll Association (as well as other credible sources), anywhere between 50 percent to 80 percent of Americans earn just enough to cover their monthly expenses.
With this being the reality of so many Americans, it begs the question: How can this pressing issue be resolved?
On-demand pay, also known as Earned Wage Access, has grown in demand and is fixing the outdated bi-weekly or monthly payroll cycles by giving people access to their earned wages when they need them.
The financial pressures weighing on the shoulders of employees can also be detrimental to you as a business owner.
If you’re curious to learn more about how financial stress affects your employees and ultimately, your company, as well as what you can do to remedy the situation, then read on, as we will go over what Earned Wage Access is, and how it can benefit your business.
The bills coming in don’t care if your employees get paid bi-weekly. They still show up, right on time, every month.
Earned Wage Access (or EWA) is a financial wellness program that essentially allows employees access to their money as soon as they’ve earned it.
It delivers an on-demand pay plan. This will give your employees peace of mind knowing their money is at their disposal whenever they need it most.
And especially in today’s post-COVID economy, having Earned Wage Access can really be a saving grace for workers.
They won’t be stressing about pending bills while waiting for payday to arrive with this employee wellness benefit in place.
Earned Wage Access supplies workers with round-the-clock access to money that they have earned. It allows you to give your employees instant access to their cash once they have earned it. This instant access protects employees from resorting to payday loans or overdrafting on their bank accounts and having to pay expensive fees. By offering EWA, employers are safeguarding their employees from cyclical debt cycles and providing a pathway to financial stability.
The superior way to execute financial wellness programs like EWA is through API integration with payroll and HR management systems so that the employees’ earnings are automatically available in the mobile app. This also ensures the employer 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.
One thing to watch out for is programs that deduct accessed amounts directly from the employees’ personal bank accounts. These programs invariably end up causing employees to overdraft, which is the very thing that on-demand pay is trying to prevent.
It essentially becomes a self-assisting operation program. Their money gets deposited once their shift is over, and they have 24/7 access to it whenever they need it.
As a business owner and employer, it’s easy to forget about the importance of supporting your workers. Workers who are not valued lose motivation and focus on the job, as well as respect for their employers.
And this is not a favorable dynamic as employees are the lifeblood of your business. If they are not valued and appreciated, how long do you think your company will stay afloat?
Acknowledging this simple fact by supporting your workers is essential.
And implementing an employee financial wellness program such as EWA can be one of the best ways that you show that support.
Here are a few ways Earned Wage Access can benefit your business:
Workers that feel heard, understood, and cared for will be much more productive on the job. Earned Wage Access can make employees feel that you genuinely care about their financial wellbeing.
As a result of this, they will be more inclined to work harder, and put in more of an effort to make you happy as well. A happy worker is a productive worker.
Surveys and studies have confirmed that when workers are stressed about money (which over 50% of Americans are), it spills over into their attitudes at work. The financial frustrations of workers can rear their ugly heads in interactions with colleagues, customers, and even you as their employer.
By implementing an EWA solution, you will ease a lot of the financial stress that weighs on the minds of your employees.
Knowing they have access to a portion of their income if they need it will relax a lot of the tension many of your workers experience. This, in turn, makes for a better, more cheerful, and positive work environment.
When employees feel they are cared for by their employers, it bolsters their loyalty to the company. And a stronger sense of devotion will result in less turnover rates and higher levels of output.
With the job market becoming increasingly oversaturated, it is becoming more difficult to find and keep good quality employees. A valid way to solve this is to offer an employee financial wellness program.
In this post-pandemic world, this is actually something many workers are looking for in their prospective companies.
Here are a few more advantages your business could experience with EWA as it relates to employee retention.
40% of Americans can’t pay for a $400 unexpected emergency. This vulnerability can be corrected with a good employee wellness benefit put in place for your workers.
Here are some other benefits for employees utilizing such a benefit:
If your workers have no emergency fund and are living paycheck-to-paycheck, they become extremely vulnerable to debt traps. This level of susceptibility is a dangerous place to be in.
Falling into credit card debt or getting coerced into taking out a payday loan are common occurrences for people in such circumstances. Earned Wage Access can help prevent that.
This employee financial wellness program can also be a means to build financial security for workers. It can act as a safety net for protection when needed.
Earned Wage Access can strengthen and reinforce the financial standing of workers. It can also instill financial confidence in employees, making them feel more secure.
EWA can offer a new beginning for those who have been struggling. It can be a solid financial foundation that creates the conditions for them to build off of in the future.
In a post-pandemic world, the future of financial wellness is bright. Having on-demand access to a daily portion of their earnings is something employees are in favor of and more organizations are recognizing the importance of every day.
At this rate, it’s totally plausible to see Earned Wage Access as a commonplace installment in most—if not—all businesses in the next 5 to 10 years.
Looking at all the data, Earned Wage Access is an objectively beneficial program for businesses. All over the world, companies are considering enrolling such a system (or some variation of it) in their business.
From increased retention, recruitment, and engagement, to creating financial stability within employees’ lives, EWA has numerous advantages that allow employees and employers to prosper.
If implementing a financial wellness program is something you’re interested in, and you’d like to learn more, get in touch with us and let’s talk about benefiting your business.
More companies are investing in Diversity, Equality, and Inclusion (DEI)...