Earned Wage Access: Driving Financial Responsibility Through Pay Flexibility

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When evaluating an employer-sponsored benefit, the two critical questions that CHROs must address are whether the benefit will be helpful to their employees and whether they would have an interest in signing up for it. A benefit that sounds good on paper may not have actual relevance in the real world. However, when it comes to earned wage access, there might not be a financial wellness benefit in your suite of offerings more relevant today.

Inflation is lower than last year but still stubbornly high at about 3.1%. The cost of goods still seems to climb. In fact, the average American household must spend an additional $11,434 each year just to maintain the same standard of living they enjoyed in January of 2021, according to recent data.

These additional financial pressures can easily lead your employees into a never-ending cycle of debt. Not surprisingly, as of the third quarter of 2023, American households carry over an astonishing $17.29 trillion in debt.

As a result, HR leaders are continuously challenged to identify financial benefits and programs that will make a difference in their employees’ lives and help them avoid the dreaded debt trap.

One such benefit that has proven successful in helping employees avoid falling under a mountain of debt is earned wage access.

Earned wage access is an employer-offered benefit that empowers users with choice and control over their earned pay to pay bills on time and avoid costly late fees and interest charges. For a small fee or no fee at all, earned wage access users can access only the money they’ve earned instead of waiting for a scheduled payday.

Earned wage access provides the flexibility that so many employees crave. Whether it’s flexibility in scheduling, workplace location, or timing of pay, employers are amending policies to meet the needs of their workforce. By offering enhanced flexibility and promoting greater work/life balance, employers are seeing a workforce that is more productive and engaged. Employers can empower their workforce to take control of their finances in the most responsible way. It also speaks to an employer’s commitment to supporting their team members on their path to financial wellness and independence.

One of the questions some HR Professionals have is whether pay flexibility will be a positive for their employees or whether employees will act irresponsibly in between pay cycles. According to research from Arizent commissioned by DailyPay, 7 of 10 (69%) users who previously paid late fees do this less often or stopped completely since they started using earned wage access. Additionally, 62% of users who previously incurred credit card interest charges do this less often or stopped completely since they started using earned wage access.

So not only are employees not acting less responsibly, but they are living better financial lives because of earned wage access.

The data also shows that earned wage access has emerged as one of the most popular benefits. According to the aforementioned Arizent study, over 7 in 10 (73%) employers say earned wage access is important or a cornerstone to their financial wellness benefits, with nearly all (93%) saying earned wage access provides a valuable addition to their suite of benefits. More than half (55%) of employers say earned wage is among the top 3 benefits employees engage with.

As we emerged from the global pandemic, employee expectations have changed. Flexibility in the workplace has been prioritized, enabling employees to strive for a better work/life balance. Employers can support this flexibility with benefits that can make a real difference in their employees’ lives. It can begin with flexibility in the timing of pay with earned wage access.

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