- Big-name retailers, restaurant chains and other employers are allowing workers to get paid daily through an app, says The Wall Street Journal (WSJ). Technology startups are providing the service to McDonald’s Corp., Uber Technologies Inc., Outback Steakhouse and other employers, largely retailers and restaurant chains.
- WSJ says employers that offer same-day pay options were looking for a low-cost benefit that could attract and retain workers and curb absenteeism. The advantage for workers is access to cash that they can use immediately or cover unexpected expenses.
- According to WSJ, some service fees are charged to employers, with no cost to workers. Other fees can cost workers as much as $3 out of each daily paycheck.
Turnover and absenteeism generally are high in the retail and hospitality industries. If a same-day pay app can cut both down, the same-day pay benefit may be worth the fee.
But employers will need to be wary. For low-wage earners, $3 out of each paycheck can be a significant reduction in pay over time. Employers also may need to ensure the program remains voluntary and the fees charged to employees are clearly spelled out and minimal.
Will being paid every day make workers budget their finances better or cause them to spend more? As WSJ points out, many Americans struggle with saving money. For workers living from paycheck to paycheck, setting aside money for any purpose can be nearly impossible.
Employers willing to offer the benefit might need to point out the advantages and short-comings involved, as part of a financial literacy or well-being program. One-third of workers cite money worries as the biggest on-the-job distraction, according to a study by the Center for Financial Services Innovation.