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October 2023  Volume 21, Number 10        
 

payroll check

On-Demand Pay Reduces Employee Financial Stress

A recent surge in on-demand pay benefits offers employers a powerful tool to reduce employee financial stress. With workers increasingly squeezed by economic uncertainty and the rising cost of living, the ability to access wages immediately is becoming a highly sought-after benefit. Offering this perk can boost worker loyalty, motivation, and productivity.

For employers, these instant payout programs also provide tangible benefits like reduced absenteeism. As financial wellness becomes a greater factor in recruitment and retention, integrating on-demand wage access may soon become a necessity to stay competitive in the labor market.

Younger Workers Drive Demand

According to a 2022 survey by staffing firm Aquent, nearly 57% of U.S. workers rated instant pay benefits as important. Among millennials and Gen Z employees ages 18-24, that figure jumped to 83%.

Experts say this generational difference is due to an expectation of instant digital access. Where services like Venmo and Zelle enable quick peer-to-peer payments, younger workers now anticipate the same immediacy from employers.

Industry leaders point out that if a project is done successfully, why should workers have to wait to be paid? Fast-casual restaurant chain Honeygrow began offering instant pay through DailyPay in 2022, and their payroll manager said the benefit helps attract and retain workers. Almost 65% of the company's 1,000 employees now use it.

Accessing Earned Wages Reduces Stress

For many workers living paycheck to paycheck, even a brief cash shortfall can trigger financial distress. According to the Harvard Business Review, 77% of employees say money problems negatively impact their mental health.

On-demand wage access allows workers to bridge small gaps and avoid deferred bills or late fees. For employers, reducing employee financial strain also decreases stress-related absences and improves focus.

A Ceridian survey found that 78% of millennial and Gen X workers said early wage access would increase loyalty. Fisher Phillips found that 89% of employees feel more motivated when they can access pay before payday. The same survey showed that 74% of workers have fewer unplanned absences when they worry less about finances.

Enhancing Recruitment and Retention

With today's tight labor market, offering on demand pay demonstrates an employer is invested in supporting workers' financial wellbeing. For many, it provides a sense of security knowing funds are instantly available in an emergency.

Experts say that 62% of employees would feel more valued if they could access earned wages daily. As financial stress becomes more acute, such benefits are increasingly important for recruitment and retention.

Implementing instant pay does require updating legacy payroll systems in some cases. It also accelerates cash flow compared to traditional pay cycles. But industry analysts say the advantages often outweigh the technical challenges for employers hoping to stand out.

In this competitive landscape, on-demand pay is seen as a value-add for any company that wants to be perceived as a top tier place to work.

On-Demand Access Seen as a Must-Have

Early adopters in retail and food service have offered on-demand pay for years. But intensifying economic pressures have made the benefit more urgent across sectors.

With savings depleted and credit card balances rising, employees are looking for ways to manage unpredictable expenses between paychecks. Experts say employers are recognizing their role in supporting workers' financial resilience.

As younger generations enter the workforce, they expect instant access as standard practice. Employers who provide on-demand wages can strengthen worker loyalty, well-being, and productivity.

With financial stress at historic levels, access to earned pay is becoming a must-have benefit. Integrating flexible, responsive pay solutions can help employers stand out while tangibly supporting their workforce. Reducing employee money worries mitigates turnover and directly benefits organizations' bottom lines.

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In this issue:

This Just In ... Rethink Your Healthcare Offerings for Healthier, Longer-Lived Employees

Seven Strategies for Helping Employees Understand Their Benefits

Preventative Health Helps Cut Costs without Cutting Care

On-Demand Pay Reduces Employee Financial Stress

Are Weight-Loss Drugs The Next Big Benefit?

 

 


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