How Businesses Can Solve Today’s Paycheck Challenge

The practice of paying people every two to four weeks started during the Industrial Revolution, when business leaders moved wages to a batch system because it was more efficient and cost-effective for them than paying employees daily.

Today, 64% of the US population lives paycheck to paycheck, even among those earning six figures. The misalignment of bills, subscriptions and expenses with a biweekly or longer pay cycle leaves employees vulnerable to costly overdraft fees and high-interest loans, leading to increased anxiety over finances.

According to several recent surveys, more than two-thirds of Americans are experiencing financial anxiety, with roughly a quarter saying that living paycheck to paycheck is the primary cause. This outdated payment system hinders people’s flexibility and can place them in an ongoing cycle of debt, inhibiting long-term financial success and causing higher levels of financial stress. Those affected are often choosing from bad financial options or have no options at all. Because of this situation, workers are seeking more choices and tools to help them effectively balance their finances to manage their lives. Wellness, including financial wellness, is increasingly seen as an important factor in employees’ working lives.

How does this impact employers? The financial stress of workers costs employers $4.7 billion per week in lost productivity. Ram Palaniappan, founder and CEO of Earnin, says that increasing financial wellness should be a top priority for businesses, especially those employing a large number of hourly workers.

An excellent solution is to empower employees with access to their pay as they earn it—through earned wage access (EWA) solutions that give workers access to their money when they need it, resulting in increased productivity and lower stress for a better life. By partnering with Earnin to provide employees with early access to their wages through Cash Out and other financial tools, employers can offer greater financial peace of mind, leading to happier and less stressed employees who benefit from better interactions with coworkers and customers.

With no mandatory fees, the Cash Out app is easy for employers to deploy using Earnin’s secure, zero-integration model that allows employees access to their paycheck ahead of payday quickly and easily.

In fact, 87% of Earnin customers say the app has increased their motivation at work, giving them peace of mind that they can get paid before payday. Likewise, 75% say Earnin has helped reduce unplanned absences, while 65% say it has helped pay bills on time and reduce financial stress.

Employers must support employees with financial wellness solutions that promise to both stabilize their finances and grow their financial future. Earnin’s Cash Out solution helps steady people’s finances by giving them access to income, while its other solutions help people maintain a positive bank balance and grow money through saving.

With the Great Resignation still upon us and high inflation making it harder for average Americans to make ends meet, it has become even more important for businesses to support employees with financial wellness solutions that prioritize both short- and long-term financial health. Is your organization up to the task?

Learn more about the benefits of early wage access at earnin.com/employers.

This article originally appeared in Business Reporter. Image: iStock id1354077707