Employer-sponsored Earned Wage Access (EWA) Benefits Employees in Profound Ways
The world of work is changing for all actors. As business models evolved, the role that employees play has changed over time. During the industrial revolution, the primary business model was one that focused on production and employees were seen as a commodity — another cog in the machinery producing products that were ultimately sold by the company. During the technology revolution, the primary business model focused on how technology could optimize the production process. Employees were still seen as a component in the machinery, but people who understood technology were highly valued.
Next came the customer-centric business model where the focus shifted from optimizing the production process to delivering value to the customer. Employees still are viewed as part of the delivery process, with specific value given to employees that were in the sales, marketing, and customer service areas. We are on the eve of a new business model — one that focuses on employees as the drivers of economic-value creation. There is a growing appreciation that all employees — wherever they are in the organization — are the key drivers of making companies successful. Employees are no longer simply seen as a component in the machinery, but the factor that makes the machinery work!
With the shrinking labor force, not only are employees the drivers of economic value creation for organizations, but now a scarce resource. That means that organizations must work harder at keeping employees in their employ — responding to their needs. What are the top needs of employees? According to a survey conducted by LinkedIn, the top two things that employees want in 2021 include:
1. Mental health support. Covid-19 brought into crisp focus that employees need organizations to accommodate their mental health needs. Companies need to be sensitive to what triggers stress at work — and the two biggest stressors are Covid-19 and financial stability.
EWA can address the stress associated with financial issues. By allowing employees to access their wages as they earn them, they ease the worry that is generated by struggling to “make ends meet” between pay checks. PWC’s reports that employees spend on average 3 hours a week worrying about their finances — these are 3 hours of lost productivity each week — easily eliminated by offering EWA.
2. Working for companies that make a difference. Employees are looking for their organizations to not simply focus on making profits, but to be part of the solution. Employees are also looking for their organizations to give them flexible work schedules, safe work facilities, paid leave, childcare, training, etc. These enhanced benefits can make a difference for current employees and candidates.
Offering EWA could be the tipping point you need to not only attract new employees but keep the ones you have happy by demonstrating you care about their needs. EWA could be the competitive advantage that could set an organization apart from the competition.
Companies should care about what employees want and need. Academic research over the last fifty years has shown that when employees perceive that they are being treated fairly by their employers, they have higher levels of performance, go above and beyond their job expectations, have better attitudes and emotions related to work, are more engaged in work. These organizations generate better outcomes — in other words, when organizations treat their employees well, they are more profitable.
EWA is one of the benefits organizations should offer employees. This telegraphs that organizations care about their employees and their lives. Some of the positive consequences to employees offered and using EWA include enhanced:
- Financial stability as they incur fewer bounced check charges and credit card interest fees. On average, eliminating the fees associated with pay day loans, bounced check charges and interest expense could be the equivalent of anywhere between a 4% and 8% raise
- Mental and emotional stability as they stress less about financial liquidity. Instead of having to wait two weeks to get paid, employees that use EWA can access their earned wages at any time which means they can buy food for their families, go to the movies, cover emergency expenses, and the like, without having to borrow money or charge their credit cards
- Engagement at work as they are not worried about making ends meet while they are on the job. Eliminating three hours a week of down-time allows employees to focus on their work — up to 150 hours more productivity or about a month more a year.
Employers should offer this benefit to their employees. It costs close to $0 to implement, there is no risk as the EWA provider carries the risk, and there is huge benefit to the employee, which ultimately accrues to the employer.