|From paying bills to taking on unexpected expenses, there are a number of reasons people experience financial burdens around the world. In fact, as inflation in the U.S. continues to fluctuate, 58% of Americans have found themselves living paycheck-to -paycheck to keep up — with nearly 70% feeling stressed about their financial situation. And this stress is not confined to people in just one financial bracket. According to PYMNTS, 76% of U.S. adults making less than $50,000, 65% of those making between $50,000-$100,000 and 47% making more than $100,000 live paycheck to paycheck.
This type of financial insecurity often causes people to pay bills or expenses using credit cards or borrowing money, whether from loved ones or through bank loans — ultimately creating even greater financial worry. That’s where earned wage access (EWA) comes into play with managing unexpected financial needs.
EWA has many benefits to both a business and its employees. For starters, by empowering employees with the freedom to choose how and when they get paid, they’re able to meet their financial obligations when needed, but most importantly, they’re likely to be more satisfied with their employer. In turn, employers can retain and attract top talent through a culture founded on respect and understanding. In addition to their work, EWA can also improve the personal lives of employees.
HR leaders are under the impression EWA is solely for businesses with hourly staff. In fact, through our recent survey conducted with HR Dive’s studioID, we found that HR leaders believe that the biggest challenge in implementing EWA is determining which employees are eligible. But if financial insecurity has no bias, neither should benefits like EWA.
If you’re among the fraction of HR professionals who believe EWA is just for hourly workers, we’re here to explain how various employee types are eligible for and can benefit from EWA:
3 Types of Employees Eligible for Earned Wage Access
Let’s start with the employee group most often associated with EWA: shift workers. From hospitality and retail to builders and nurses, employees paid at an hourly rate represent more than half of all wage and salary workers in the U.S. Whether working set days or as needed, hourly employees need benefits as flexible as they are. They need EWA to enable them to access their pay when and how they need it. Additionally, employees working in the service industry often rely on tips as much, if not more, than they do their regular paychecks. With the right EWA program, managers can easily, safely and quickly pay out tips to employees at the end of their shift.
Independent Contractors & Freelancers:
What was once deemed as “side hustles” has grown into careers for many. Independent contractors are increasingly being hired for short-term or specialized projects — changing the way people do business. Between channeling specialized expertise, expanding the talent pool, scaling operations, and more, there are a number of benefits to embracing the gig economy. In fact, experts predict that by 2027, the U.S. workforce will be made up of more gig workers than non-gig workers. So, as businesses continue to adapt to new ways of operating and managing outside sources, there needs to be a discussion about when and how contractors and freelancers are paid — like daily through EWA to help keep cash flows in check and build trust between a business and contractor.
The group most often forgotten when it comes to EWA are salaried employees. Why is that?
It turns out, HR execs noticed a perceived stigma around EWA amongst salaried workers. Many people believe that only those in financial hardships would or should be allowed to access daily pay. This has discouraged salaried workers from requesting EWA at their companies. But EWA is not just about minimizing financial burden for workers — although, as 51% of people making six-figured salaries report living paycheck to paycheck, it could help.
There is an opportunity right now to shift the perception of EWA across generations and help more of the American workforce understand that taking advantage of instant access to their wages is a smart financial choice – not an indication of poor financial choices. Instead of employers holding on to wages, having access daily can make a big difference in the lives of all employees, even if they don’t necessarily need the money right away — like for investing or contributing to a savings account. Employees of all types run into unexpected bills and expenses. EWA can help in avoiding overdraft fees by giving employees control over their finances to better manage emergency expenses.
BONUS: EWA is a powerful tool for recruiting, retaining, and engaging employees. Organizations should make sure job candidates and employees at all salary levels — especially those in high turnover or highly recruited positions — know about it.
Any and all employees can benefit from having access to on-demand pay, because, at its core, earned wage access is a financial wellness solution designed to empower employees, regardless of how they are paid.
If you’re interested in learning how you as an HR leader can help your company’s staff, no matter if they are hourly, contracted, or a salaried employee, click here and discover how earned wage access can enhance employee wellness.