About half (58%) of Americans are living paycheck to paycheck. Hourly-wage workers, in particular, are unsure if their paycheck will arrive in time to pay bills. The pandemic and historic high inflation rates have intensified stress for hourly employees and even those earning wages of $100,000 or more report feeling strained financially.
Feeling financial stress has significant consequences on a person’s mental and physical health, according to the American Institute of Stress. Individuals feeling financially strained are likely to experience increased irritability, anxiety, appetite changes, stomach issues and fatigue. It can also impact a person’s work performance and loyalty to an organization.
One study found that “financially stressed employees are twice as likely to look elsewhere” for a job. The same research revealed that 76% of respondents sought companies that care about their financial well-being. Innovative companies recognize this changing dynamic needs and are offering earned wage access (EWA) or on-demand pay benefits, which generates goodwill among their workforce.
In a study by Arizent, 77% of employees who choose EWA requested their pay immediately, likely signaling a pressing need to make an immediate purchase—whether to pay a bill or put gas in their vehicle to get to work the next day.
Changing the traditional payday concept can help employers make a real difference in workers' lives. By immediately delivering financial support to their employees when they need it most, on-demand pay empowers them to manage their finances, adding value to their employers through increased focus and productivity.
EWA is offered by just 5% of large U.S. companies with a majority of hourly paid workers, according to the Society for Human Resource Management. However, that figure is expected to jump to 20% by 2023.
Wal-Mart has nearly 500,000 employees using EWA. The benefit ranks among the top three employee priorities behind health insurance and retirement benefits. McDonald's and Uber are two more examples of major employers who provide immediate access to wages earned.
Instant access to cash is only part of the motivation for an individual to stay or seek a new job. Growth and development opportunities are also reported to be more likely to encourage retention and employee loyalty. For example, mentorship programs that assist frontline salespeople with career path planning helped a sales organization increase retention by a double-digit percentage, according to McKinsey & Company.
A company's most loyal employees consistently find meaning and enjoyment at work. The McKinsey & Company report stated, “When a group of truck drivers was asked why they stay in their current role, one driver responded, “I love driving and this job allows me to do that, travel and meet new people.” Having a sense of meaning creates more fulfilled and ultimately happier, employees.”
Target is one major retailer that has taken the lead in prioritizing the development of frontline workers. In 2021, Target launched a free education and upskilling benefit for employees giving workers access to more than 250 business-aligned programs.
Other companies like Walmart and PwC have established internal training labs and academies that deliver programs through high-tech solutions. For example, Walmart uses VR headsets in every supercenter to provide corporate training.
In a bold move, Amazon’s Career Choice upskilling program is designed to support employee development within the company or help them prepare for other higher-paid jobs in their community. And as a real leg-up, Amazon's program pre-pays for the training rather than making an employee wait for reimbursement after the program has been completed.
Employee loyalty is one of the most coveted qualities businesses strive to achieve as the “Great Resignation” has created a competitive hiring market. While companies recognize engaging employees is linked to how individuals feel at work, a disconnect remains. 60% of workers feel detached and 19% feel “actively disengaged,” according to Gallup’s 2022 State of the Global Workplace Report. Companies' productivity and profitability are directly affected by this lack of connection.
Workers expect more from the companies that employ them—not just in terms of wages but through benefits that reflect modern lifestyle demands. Organizations that listen to what employees want and offer benefits paired to those requests gain an advantage in reducing turnover rates and developing a stable, long-term workforce. EWA and a more intentional development of employees are just two ways companies can support workers to reduce turnover and increase recruitment efforts.