The financial burden on individuals and households continues to worsen with rising inflation and global instability, causing many employees to feel the pressure of meeting their day-to-day financial needs.
At the start of 2022, 64% of the U.S. population was living paycheck to paycheck, even among those earning six figures. These employees often rely on payday loans, advances, credit cards and overdraft extensions to make ends meet as they wait for the rigid two-week or four-week payday. However, bills, subscriptions and necessary expenses don’t wait for payday.
These challenges are pushing employees to take control of their own financial futures. Employers must act now and think differently when it comes to employee satisfaction.
Employees Seek Companies that Prioritize Financial Wellbeing
In the era of the Great Resignation, employers are seeking ways to retain their employees and hire new talent.
According to PwC’s 2022 Employee Financial Wellness Survey, financially-stressed employees are more likely to look for a new job. Among employees who say that their financial worries have had a severe or major negative impact on their productivity at work, 67% are struggling to meet their household expenses on time each month, 71% have personal debt and 64% are using credit cards to pay for necessities they couldn’t otherwise afford.
To keep up and stay competitive in a tight labor market, companies need to take a closer look at the benefits most valuable to employees today. Financial wellness and planning resources are key focus areas to retain and attract talent across industries because employees need to feel empowered. One way to do so is to provide them access to their earnings as they earn it, removing the hurdles of cash flow timing from traditional payment cycles.
The Role of Earned Wage Access for Employee Experience
Earned wage access (EWA) offers employees a way to tackle the challenges associated with the speed of money, freeing them from employers’ payment cycles. By offering access to money right after employees work, employers increase employee satisfaction, motivation and productivity and experience better retention and recruitment.
In fact, an industry study conducted during the pandemic uncovered how early access to wages impacted people, finding that 82% of employees felt the services made them less stressed about their financial situation, 77% noted an improvement in their mental health, and 81% say they had higher self-esteem. The access to on-demand pay allows people to buy groceries, pay bills and cover life’s unexpected expenses with their own money.
This access also brings benefits to the employer, as financially stressed employees are 77%more likely to leave for another employer and spend two to five hours a week dealing with personal finances at work, impacting productivity.
The balance of employees being satisfied with their financial situation and employers offering an option that helps translates into happier, less stressed employees. It also manifests itself in better interactions with colleagues and customers, all of which results in improved customer experience, brand image and sales.
Ratesh Dhir serves as VP Business Development & B2B at Earnin, which builds products designed to help employers support their employees’ financial wellness. He is responsible for building brand partnerships to help employers reduce employees’ financial stress and improve retention and business productivity. Prior to joining Earnin, Ratesh served as VP of Business Development at Even in addition to serving as CEO of iTeleport. He also held various leadership roles at companies in the software and mobile device development space. Ratesh obtained his bachelor’s degree in economics from the University of Liverpool.
Weekly news and industry insights delivered straight to your inbox.