The Essential Benefit in The Year of COVID-19
COVID-19 has forced many companies to rethink the logistics of their operations and reexamine what employee benefit plans make sense for employees.
One problem for many employees during the pandemic is the traditional two-week pay period. Many employers are giving employees the option to use earned wage access, also known as on-demand pay. That relatively new benefit gives them access to the money they’ve already made much more quickly, adding a much-needed boost to your employee benefit program.
What is Earned Wage Access?
Earned wage access programs allow employees to receive their pay before “payday” for a small fee. It’s become an essential benefit for many workers because of the unpredictability of the pandemic in many industries.
Earned wage access is growing, and it’s believed that COVID helped fuel that growth. Gartner reports that only 6% percent of large companies where most employees are paid by the hour offer it now. However, that number is expected to increase to 20 percent by 2023, as more and more companies incorporate it into their employee benefit plans.
It’s estimated that the market for the service is at 45 million workers or more. About 8 in 10 employees want on-demand payment, but only 6% have access, according to surveys.
Employee Benefits of Earned Wage Access
Earned wage access is popular because it lends itself to several benefits for employees and their companies. COVID has put many people in tough financial positions, like reduced hours or having to string together multiple jobs.
The ability to draw pay quickly is an appealing addition to employee benefit programs, as employees can receive their money immediately and pay bills, buy groceries, etc. Rather than wait two weeks between paychecks, employees can bridge the gap between their pay cycles quickly.
When emergencies arise, earned wage access is also a welcomed alternative to more costly ways to get money quickly, like credit cards or payday loans.
Business Benefits of Earned Wage Access
Employers are also finding that earned wage access gives them a competitive advantage when hiring new workers. Job seekers are starting to evaluate potential employers on their employee benefit plans, especially regarding benefits that allow them to get paid more quickly. Plus, employee retention also increases as employees stay with a job because they can get paid quickly.
With 80% or more of wage earners living paycheck to paycheck, earned wage access is becoming an essential benefit during COVID. That is particularly true for companies who pay employees hourly. It’s why employers will find it useful to incorporate it into their employee benefit plans during these tough economic times.