A majority of U.S. workers—83%—believe they should have access to their earned wages at the end of each workday or shift according to a new poll. Their preference runs counter to the traditional two-to-four week pay cycles that have been in place for decades.
A lot of money is at stake. Ernst & Young estimated every day there is approximately $1 trillion in accrued employer payroll accounts in the U.S. and 36 other developed countries.
The study of U.S. workers was conducted online by The Harris Poll for HR and payroll management company Ceridian in August 2021. Ceridian said the poll, “… reveals clear expectations from millennials through to Generation X employees (between the ages of 18-44) to make payday more flexible.’
For this workplace demographic, the poll also found that:
- 80% would prefer to have their pay automatically streamed into their bank accounts as they earn it.
- 78% said free access to on-demand pay would increase their loyalty to an employer; 79% said it would make them feel more valued as an employee.
- 81% would take a job with an employer that provides access to earned wages on-demand at no cost to them over an employer that does not.
“These results reveal that on-demand pay is not only a differentiator but also a requirement for employees,” said Seth Ross, general manager of Ceridian’s Dayforce Wallet and Consumer Services.
“With the incredible pace of innovation affecting every industry, we’re entering a new evolution on how people want to be paid. With streaming pay, employers give workers more control over their financial well-being. That means offering people the peace of mind to cover an unexpected expense or the ability to take advantage of investment opportunities they might not otherwise have,’’ according to Ross.
Helping To Build Trust
HR and workforce expert Dr. Kate Tulenko said, “Companies pay employees daily for a number of reasons. One is in low trust industries where the employees don’t necessarily trust the employers to pay them. This is especially true in industries that have a history of wage theft or in which many of the employees are undocumented. You also see daily pay in industries where there is a high level of staff turnover or where employees live paycheck to paycheck and have a history of reliance on high interest rate payday loans.”
Relieving Financial Pressures
According to Ernst & Young, “The main use case for on-demand pay is that of everyday financial pressures, which we have found to be widespread: 70% of individuals in the UK and U.S. experience financial stress regularly. Half of these individuals have faced a financial shortfall between pay periods and encounter this issue approximately every four months.
“The negative impacts for individuals are considerable: nearly 75% of those who have experienced financial difficulties have reported material deterioration in their health and wellbeing.”
A Growing Trend
Tulenko observed that, “The daily pay trend is increasing and there are a number of companies that make it easier for employers to pay employees daily. Daily pay has also become popular in sectors in which companies are competing with each other for staff. For example, the restaurant industry is a perfect storm for daily pay: low pay, high numbers of unbanked workers, high turnover, and high staff vacancy rates.
“You also see daily pay in sectors that are extremely dangerous. For example, in the health sector, workers might be paid daily for working during pandemic, such as Covid during which there are staff shortage[s] and high levels of personal risk,” she said.
Advice For Business Leaders
Impact of Daily Transaction Cost
HR expert Tulenko said “The disadvantages to employees of daily pay is the transaction cost of a daily payment. In some cases, this may cost more than late fees, overdraft fees, or credit card advances.
“There is the concern that with some forms of daily [pay] the fees may end up being higher than the cost of overdraft fees or late fees or payday loans.
Faster Cash Flow
“The disadvantage to companies is cash flow,” according to Tulenko. Rather than delaying “employee payday for two weeks or one month, the cash must be available immediately. This will increase the amount of cash a company needs to keep on hand. If a company pays employees only once a month, it has a longer time to accrue the cash for payment; but if a company pays daily, it needs to have a faster cash flow that makes cash available every day.”
She recommended that, “A business must look into the details and the potential impact that it has before it considers this [option] for their employees. The company can also potentially address this problem [instead] by providing emergency advances for employees… or also giving them training and support in budgeting.”