The worker shortage caused by the great resignation has hit small businesses hard, forcing employers to scramble to find new ways to attract and retain talent. One increasingly popular way to do that? Pay workers faster — or immediately.
Eighty-three percent of employees believe they should have access to their earned wages at the end of each day, rather than have to wait out the two-week pay cycle, according to a Harris Poll conducted for HR and payroll management company Ceridian. Seventy-nine percent of those surveyed said this would make them feel more valued as an employee.
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“We started examining on-demand pay in 2018 and 2019, and there was a lot of anxiety around adopting these solutions,” says Evelyn McMullen, research manager at analyst firm Nucleus Research. “But now it’s becoming table stakes, and we're seeing it become a competitive advantage for businesses that hire hourly workers.”
For employees, earned wage access gives them the chance to utilize money they have already earned in case of an emergency, surprise bills or other unexpected financial situations. Earned wage access can also eliminate the need for payday loans, which can come with considerable interest.
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Earned wage access vendors like Payactiv, Branch and Tapcheck can seamlessly integrate with most payroll systems, eliminating some administrative headaches for companies and providing employees with the tools they need to help them budget and save money. That can go a long way in helping workers feel supported by their workplace: the Harris survey found that 78% of employees said free access to on-demand pay would increase their loyalty to an employer.
As with any new system, adopting and implementing can be a challenge. And for smaller businesses in particular, McMullen says, earned wage access can seem like an intimidating shift.
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“A lot of the publicity around on-demand pay is from the larger vendors that are typically serving enterprise customers,” she says. “So it can be a little bit daunting to smaller businesses. But the reality is, there are providers that will integrate with most payroll systems that smaller businesses might already be using, so there's really not much of a barrier to access there.”
In addition to supporting their workers’ financial health — now and into the future — embracing these new tools can help set a company up for its own future success, McMullen says. As more small businesses embrace HCM technology, they’ll be set up to easily implement earned wage access solutions.
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“This is really a turning point for small businesses to digitize as far as payroll goes,” McMullen says. “As small businesses start to take advantage of payroll and HCM technology, they're going to be able to take advantage of these kinds of benefits.”
