Employee Wage Access: Supporting Your Workforce
When an employee is struggling at home, it can affect their ability to concentrate at work, decreasing productivity and job satisfaction. In 2019, a study reported that four out of ten American workers could not cover unexpected expenses. And, in a COVID world, these numbers are undeniabley much worse. Employees report that the inability to maintain financial stability during a personal crisis affects their ability to perform well at work and pushes them to consider leaving positions in order to seek out new, potentially better paying, opportunities.
For business leaders, the struggle to maintain employee loyalty and satisfaction is a balancing act. This has led to the implementation of many modern programs meant to support and empower workers to maintain financial stability and keep them with their current employer. One such program is early wage access (EWA). EWA provides more immediate access to wages earned, allowing employees the flexibility to choose not to wait until their traditional payday. Employers that have implemented the program claim that this allows employees to control their finances in a way that provides financial stability and allows them to keep their position in their current company.
While many employers have seen a benefit to their employees and their organizations, EWA programs are not without critics. Some have speculated that EWA is the equivalent of a modern-day payday loan, allowing organizations to keep employees without paying a livable wage. Because these programs primarily target low-income and part-time employees, some experts feel the implementation of these programs can be used in lieu of adequate compensation. However, adequate compensation is the key to maintaining employee satisfaction, and in situations where employees are well-supported at work, they are more loyal and have increased levels of job satisfaction.
Organizations like Walmart have seen success in the implementation of EWA programs, reporting that their employees are not only more satisfied, but in a better position to control and balance their finances. While they say it is well worth the effort, they encourage employers to consider the challenges they may face before implementing EWA programs.
Like any new payroll program, EWA programs create a need for additional payroll staff to implement, manage, and maintain the programs. Because funds need to be readily available, it often means hiring more hands for your payroll team. In addition to payroll staff, employers have reported barriers in integrating payroll systems, verifying that employees’ requests coincide with the work done, and ensuring that employees are paid quickly. Some EWA programs report that it can take up to two days for employees to get their paychecks.
When selecting an EWA program to implement at your organization, do your research. Know the challenges your organization may face, have policies and procedures in place to handle unexpected conflict, and decide if additional staff may be needed. In many cases, outsourcing payroll to an organization that offers EWAs as an option to your employees can mitigate risk, decrease costs, and allow employees faster access to their money.